Milk price: Tesco throws down gauntlet to rivals
Supermarket follows vow to use only British milk in yoghurts with premium price pledge on cheese
Tesco has sought to distance itself from rival supermarkets in the ongoing milk price row, offering a guaranteed price for milk used to make British cheese, and promising to introduce simpler country of origin labelling.
Britain's largest supermarket is one of several retailers, including Sainsbury's, Waitrose and Marks and Spencer, which has long paid at least the estimated 30p a litre production cost for liquid milk. It has also promised to stop importing cheaper German milk to make its own-brand yoghurts from March 2016.
Its announcement on Wednesday that this winter it would also pay 30p a litre for milk used in cheese makes it the first supermarket to offer a price guarantee on milk used to make derivative dairy products, The Guardian says.
The moves constitutes a challenge to rivals – and especially to the supermarkets which have recently given ground to milk price protesters.
Asda, Aldi and Lidi have all agreed to pay 28p per litre, while Morrisons, which will also introduce a new premium brand that pays farmers more, has said it will pay 26p for its standard milk. While still below cost of production claimed by most farmers, the new figures represent a premium on the 23p 'farmgate' price, after the removal of European quotas last year led to steep falls.
Tesco's move was welcomed by farming unions, which have held several rounds of talks with the grocer in recent weeks. National Farming Union dairy board vice chairman Michael Oakes told Farming Life the decision is "especially welcome as we are heading towards the winter as farmers face significantly higher costs of production while cows are housed".
European agriculture ministers are set to meet next week to discuss price falls across a range of farming sectors, including in the dairy industry.
Milk price: Tesco pledges to go British for own-brand products
Dairy farmers protesting over the crisis they say is facing their sector have secured another major victory, as the UK's largest supermarket group announced it would end the use of cheaper imported milk for its own-brand yoghurts.
The Guardian reports that Tesco, which currently uses German milk in the products, has pledged to use only British milk from March 2016. The climbdown comes after a spate of protests in which dairy farmers blockaded a distribution centre on Sunday.
Tesco and Sainsbury's had largely escaped protests that have been targeted at their 'big four' rivals Asda and Morrisons as well as discounters Aldi and Lidl in recent weeks, as their existing agreements guarantee a price to suppliers above the estimated 30p per litre production cost for liquid milk. But since recent concessions from across the sector promising a price much closer to the production outlay, focus has shifted to the wider issue of milk used in derivative products.
Imports from the continent are often used to produce yoghurts, cheese and butter - and packaging rarely states clearly from where the milk was sourced. Earlier this week environment secretary Elizabeth Truss hinted she may force supermarkets to improve the clarity of labelling.
Tesco made its move after a meeting with farming unions this week. A follow-up meeting will take place on 2 September to discuss setting a minimum price for milk used to produce the supermarket's own-brand cheese, and changes to 'country of origin' labels, Farmers Weekly says.
A meeting is also scheduled next month between European agriculture ministers to discuss the effects of the fall in prices, which the Financial Times notes has been in part caused by the removal of European production quotas.
Milk prices: Tesco targeted over cheap milk imports
Tesco is the latest supermarket to be singled out by dairy farm protesters, who have switched their focus to imports of cheap milk imported from the continent and turned into butter, cheese and yoghurts.
The Guardian reports that environment secretary Elizabeth Truss hinted yesterday that the government may change labelling laws, forcing supermarkets to reveal the origin of milk in their dairy products. After meeting representatives of farming unions, she claimed that less than half the butter and cheese eaten in Britain is made using milk from British farms.
Tesco is meeting farming groups today to discuss the imports of foreign milk, seen as a primary reason for the 25 per cent fall in prices over the past year, following the removal of production quotas in Europe. The Independent says Tesco was targeted on Monday by protesting farmers, who used tractors to blockade one of its biggest distribution centres in the UK.
Recent protests have concentrated on Asda, Morrisons, Aldi and Lidl, which had previously refused to raise milk prices. All four have now said they will pay a fixed minimum of 26p to 28p per litre – still less than the estimated production cost of 30p per litre.
Farmers unions told the BBC the meeting with Truss was "constructive" but that protests would continue as the industry is "desperate".
In the latest of a series of stunts to raise awareness of the issue, dairy farmers have mimicked the hugely popular 'ice bucket challenge' which went viral last year and raised millions for motor neurone disease charities. The 'milk bucket challenge' features farmers being doused with milk and nominating others to do the same, with money raised going to the Farm Community Network.
Milk price: Asda, Morrisons, Aldi and Lidl to pay more
Asda, Morrisons, Aldi and Lidl have all given ground in an ongoing row over milk prices, responding to growing protests and negative publicity by vowing to pay more than the current wholesale price for milk, which farmers say does not meet the costs of production.
The supermarkets, which have been the target of widespread action by dairy farmers, including one protest in Stafford in which two cows were herded through an Asda store, have announced that from today they will up the amount paid to suppliers. Asda, Aldi and Lidl have all said they will pay a minimum of 28p a litre for all liquid milk (as opposed to milk products such as cheese), while Morrisons has said it will pay 26p, The Guardian reports.
Farming unions have quoted prices of between 28p and 30p per litre to produce liquid milk, meaning even after the increases farmers are still likely to be making a loss. Marks and Spencer, Waitrose, Sainsbury's and Tesco deal pay at least 30p. The wholesale price set by the main milk cooperative, Arla, is currently closer to 24p.
Morrisons announced last week that it would introduce a new premium brand of milk in the autumn that would give shoppers the choice to pay more, but had initially refused to increase the price paid for its standard milk. Along with Aldi and Lidl it gave in on Friday after an announcement from Asda earlier in the day. Morrisons has also said it will launch a new brand of cheese that will similarly ensure dairy farmers are paid more.
The Guardian notes that as a result of a growing price war and, more significantly, a supply glut resulting from the end of production quotas in Europe, the cost of milk has declined even as demand has surged in recent years. Since 2007, the amount of milk sold in the UK has risen by 11 per cent to 5.5 billion litres, but the value of sales has fallen from a peak of £3.5bn in 2009 to £3.2bn.
Milk farmers' plan cuts out the supermarkets
Milk farmers are finding ways to cut out the supermarket middleman as a row over rock bottom prices prompts more to seek direct-to-shopper sales.
The Daily Telegraph reports that Farmdrop, an online service which provides door-to-door delivery of goods purchased directly from local farms, has seen a 700 per cent increase in dairy farmers registering since the start of the year. The website was set up by former Morgan Stanley stock broker Ben Pugh and secured a £100,000 investment earlier this summer as it seeks to raise £3m to evolve away from a click-and-collect model.
The crisis affecting milk farmers has hit headlines recently as protests around the country escalated. A global supply glut has pushed the wholesale price per litre paid by the main co-operatives significantly below the 28p average production cost quoted by unions, and is forcing many farms out of business.
Protests have focused on chains such as Aldi, Lidl and Morrisons, which do not guarantee to pay more than the cost of production. Sainsbury's, Tesco, Waitrose and other chains do offer such a promise.
Morrisons announced this week that it will introduce a new premium brand to give shoppers the choice to pay more to British farmers.
Alongside the growth in online sales, The Guardian cites data compiled by trade magazine Farmer's Weekly which shows that more farmers are offering local sales directly to their communities. It has created a map (see below) showing the 60 farms around the UK which now allow consumers to buy produce from them, marking "the revival of market that was lost with the emergence of refrigerated lorries and supermarkets in the second half of the last century".
Morrisons launches new milk brand after protests
Morrisons has announced the launch of a new premium milk brand that will be cost more and result in higher payments to farmers, as it seeks to draw a line under a recent spate of protests.
After talks with with farming unions, the supermarket group announced the roll out-of the "Milk for Farmers" brand across all of its nearly 500 UK stores in the autumn. According to the BBC, the milk will be priced at £1.12 for four points, compare with 89p for its standard milk. Morrisons corporate services director Martyn Jones said it will allow "customers to pay a little more if they want to support British farmers".
Dairy farmers have been protesting across the country in a widespread action targeted at Morrisons, Aldi and Lidl, which do not guarantee to pay farmers the cost of production. Last week police had to be called to an Asda in Stafford after two cows were herded into the store.
Farmers are angry at a drop in the wholesale – or 'farmgate' – price of milk in the past year, amid a supply glut caused in part by the removal of European production quotas. The Mirror says that compared to an average production cost of 28p per litre, the farmgate price paid by the three chains has slipped to around 23p.
By contrast, Marks and Spencer currently pays close to 33p, Waitrose around 32p, Sainsbury's and Tesco 31p and the Co-op 28p. Their four-pint cartons of milk sell to consumers for at least 10p more.
The National Farmers' Union told The Daily Telegraph it will hold further talks with Morrisons on Friday in the hope of persuading it to move all milk pricing to the Milk for Farmers basis. It has not ruled out further protests in future and has said action to highlight the low prices paid by others would continue.
Cows herded through Asda as milk protests escalate
Action by dairy farmers escalated at the weekend after two cows were herded into an Asda store in Staffordshire by 70 prostesters, who say a squeeze on milk prices is forcing farms to trade unprofitably and putting many out of business.
The protests are the latest in a long-running battle between farmers and the big supermarkets over reductions which have brought the wholesale price down below the average cost of production. The BBC says figures from unions and the British dairy organisation AHDB show that farms are being paid an average of 48p for a four-pint carton of milk that costs them 62p to produce and retails at 94p.
During a day of action last Thursday, distribution centres were blockaded with tractors, and on Friday 'trolley dash' protests were carried out on Friday night, with shelves being emptied of milk across the country.
Protests have targeted Asda, Morrisons, Aldi and Lidl. Sainsbury's and Waitrose are among those to have been largely spared as they deal direct with farmers and agree prices linked to the cost of production.
Farmers unions held an emergency summit today and leaders will meet bosses at Morrisons on Tuesday. James Hole of Farmers for Action told The Guardian it had "told Morrisons to bring their chequebook".
The main milk cooperative in the UK, Arla, which triggered the latest wave of protests with a price cut last week, has said the problem is a major supply glut from both the UK and overseas that is driving down wholesale costs. It said it was "doing everything possible to help our farmer owners to navigate through this increasingly tough situation".
Why are farmers emptying Morrisons' milk shelves?
Farmers are clearing milk off the shelves of British supermarkets, filling trolleys which they either pay for and take away or else leave languishing at the checkout. It's called the "trolley challenge" and it's a protest against what they say is unfair pricing that is pushing farms out of business.
The Independent says branches of Morrisons, Lidl and Asda "have all been targeted since Arla, the UK’s biggest milk co-operative, announced the latest price cut of 0.8p per litre of milk". This took the average price paid to 23.01p, while farmers say each litre of milk costs between 30p and 32p to produce.
Figures from British dairy organisation AHDB Dairy show that over the past year the average price paid to farmers has dropped by 25.4 per cent.
Morrisons was singled out for a 'day of action' outside distribution centres on Thursday, The Guardian reports, after it refused to negotiate with the farmers union. The in-store protests have been going on for more than a week in locations up an down the country, with a more concerted action planned to empty supermarket shelves on Friday.
The paper says that rivals such as Sainsbury's and Waitrose are not being targeted because they guarantee a price for milk that covers the cost of production.
The BBC reports that farmers protesting at supermarkets in Scotland earlier this week claimed that 19 farms had gone out of business this year in Scotland alone, and that more were on the brink of bankruptcy. The farmers said they were losing about £200 a day to produce milk at the current prices.
Darren Blackhurst, Morrisons' commercial director, told the Independent that reduced global demand had created an oversupply of British milk, creating "difficult conditions" for many dairy farmers. He said that at a meeting with the National Farming Union this week, the supermarket pledged not to accept "further price decreases from our suppliers."
Tesco said its 'Sustainable Dairy Group' means it pays "a fair price based on the cost of production" and that it was "proud" to be "consistently paying one of the highest prices in the industry for our milk”. Lidl said that it works closely with farm assurance schemes such as Red Tractor and RSPCA Freedom Food.