In the same week that Arla became the first major UK processor to announce a milk price rise since the dairy crisis which began in 2014, Tesco announced a price cut for members of its Sustainable Dairy Group.

The cut, 1.08 pence per litre, was announced following the regular six-monthly review of production costs and market movements. Tesco said the cut was made in light of reductions in the cost of feed and rising milk volumes.

From 1st May, Tesco will pay its 600 dedicated suppliers 30.93ppl. The longer-term pricing mechanism used by Tesco aims to ensure farmers are reimbursed fairly for their milk, enabling them to invest and plan for the future.

Independent consultancy Promar is responsible for analysing data and setting milk prices for the coming six months.
 
Tesco’s Director of Agriculture Tom Hind commented, “The TSDG remains a cornerstone of our plans to build ever stronger relationships with our producers. Over the past eight years we have worked in partnership with our dairy farmers to provide the best quality milk possible for our customers, whilst still paying a fair price for the milk we buy.

“Through TSDG and our pioneering Dairy Centre of Excellence with Liverpool University, Tesco has invested £200 million into British dairy farming. By agreeing a clear price for a period of six months, we are able to offer our farmers valuable security in a volatile market.”

 James Stephen, Aberdeenshire TSDG dairy farmer and Committee Chair, added, “The pricing structure of the TSDG goes some way to providing stability and peace of mind, which is often lacking in an increasingly volatile industry. Set for six months, all farmers in the group have real certainty over the milk price they’ll receive, which is of huge benefit when budgeting and planning for the future.”