Tesco has agreed to increase the amount it pays farmers for milk used to produce cheese, in a major victory for the dairy industry in its battle with supermarkets.
Britain’s biggest retailer will pay farmers a price based on the cost of production in what farming leaders described as a significant move.
Tesco already pays a price linked to the cost of production for milk itself, but it is the first major supermarket to extend the link to cheese.
The move means it will pay 29.93p per litre for milk in cheese over the winter period, according to the National Farmers Union.
The NFU has said dairy farmers face a “state of emergency” after a 25% fall in the wholesale price of milk in the past year. The average farmgate price of milk stands at 23.35p a litre, below the estimated cost of production of 30p a litre.
Farmers blame supermarkets for the slide in milk prices, saying it has been used as a weapon in the industry price war and that retailers are not doing enough to promote British-sourced products. In protest they have blockaded distribution centres and herded two cows through an Asda store in Stafford.
Supermarkets say the fall is the result of an oversupply of milk in Europe, but they have bowed to pressure from farmers on a number of issues. Asda, Morrisons, Aldi and Lidl have increased the amount they pay, and Tesco hasagreed to use only British milk in its own-brand yoghurts instead of importing from Germany, as it had done previously.
Matt Simister, Tesco’s commercial director for fresh food and commodities said the company was now increasing the amount it pays for milk in cheese because it “can understand how difficult the current market conditions are for farmers”.
He said: “By introducing a higher price, linked to our cost of production, customers can be confident that when they buy Tesco Standard Mild & Medium cheddar, Tesco Value and Standard Red Leicester and Double Gloucester cheese, all our producers have benefited from a fair price for their milk.
“British farmers deliver some of the highest standards of milk quality in the world and some of the best conditions for animal welfare.
“It is a naturally healthy and nutrient rich product we can all be very proud of. Across the UK, customers tell us that they want to buy milk products from cows which are looked after properly and they want the price that’s paid to producers to be fair.
Source: The Guardian