Tesco Drops Milk Price in line with Cost Tracker

UK - As of April 1, producers supplying Tesco's Sustainable Dairy Group will receive a new price of up to 29.56 pence per litre (ppl), following the six month independent cost tracker review. This is a 0.65 ppl price cut.
calendar icon 30 March 2012
clock icon 2 minute read

Those Sustainable Dairy Group members not following the cost tracker will receive a price of 29.06ppl.

The new price takes into account a reduction in feed costs, predominantly wheat. The price of wheat has fallen from £210 per ton in February 2011, to £165 per ton last month. The new price also reflects an increase for fuel, farm labour costs and unpaid family labour.

Now in its fifth year, Tesco remains committed to its industry leading price model based on the true cost of production. Since 2007, Tesco has invested £145 million into the Tesco Sustainable Dairy Group over and above the average UK milk price paid to farmers, meaning farmers who supply Tesco have benefited from one of the highest prices paid by a retailer, the group says.

The Tesco Sustainable Dairy Group aims to ensure that farmers are paid a fair price for their milk with additional provisions for making a profit including capital investment, depreciation of assets and un-paid family labour.

Andrew Yaxley, Tesco Commercial Director said: “ Five years ago the Tesco Sustainable Dairy Group was established to address the huge uncertainty faced by dairy farmers caused by continuing volatility in the markets, providing much needed stability. Our 700 farmer members continue to benefit from Tesco’s pledge to recognise the true cost of production with additional provisions, which means a brighter future for British dairy farmers.”

Will Hosford, Dairy Farmer and Farmer Committee Chairman said: “"While a fall in milk price is never welcomed, the Tesco Sustainable Dairy Group continues to give producers supplying Tesco the confidence to make the necessary investment their businesses demands. This has been a positive journey over the last five years for both farmers and Tesco, and I look forward to continuing this good partnership."

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