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Morrisons Signs New Milk Contracts with Dairy Crest and Arla Foods

29 January 2015

UK - UK supermarket chain Morrisons has agreed a new three-year contract for liquid milk with dairy processors Arla Foods and Dairy Crest.

Morrisons already has an existing relationship with the farmer-owned cooperative, Arla Foods, for liquid milk but the new agreement guarantees increased volumes.

Arla has just opened what is understood to be the most efficient milk processing plant in the world in Aylesbury, where the retailer’s fresh milk is processed and Morrisons believes that this investment in the British dairy industry will lead to stronger returns for Arla farmers in the long term.

Morrisons also has an existing relationship with Dairy Crest and although it will be reducing volumes for liquid milk, the processor will continue to supply Morrisons with high volumes of other dairy products including cheese, butter and soft spreads.

The agreements will also bring closer Morrisons’ ambition to introduce a scheme that will help farmers manage the volatility of their milk price.

This will involve working with a group of farmers to help them hedge prices.

Casper Meijer, Morrisons Group Trading Director said: “Following the end of our previous five year contract, we have chosen to continue the relationships with our existing dairy companies ensuring no further volatility is brought to the dairy industry. It’s important that we can assure customers of a long term supply of liquid milk and our existing relationships with both processors have already shown us they can deliver that.”

Martyn Jones, Morrisons Group Corporate Services Director said: “Arla is owned by farmers which means that members will not only receive more business from Morrisons but should receive a benefit from their cooperative. Also, by working with a second processor, Dairy Crest, we will be reaching a greater number of farmers than we would with a single dairy company.”

As part of the contract negotiations Morrisons held discussions with all the major dairy companies including Graham’s of Scotland.

As a result of these discussions Graham’s will now begin to supply their brand of milk and butter to Morrisons stores in Scotland.

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