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Tesco Announces New Pricing Structure For Dairy Farmers

Published on Sep 24 2014 8:43 AM in Supply Chain

Tesco Announces New Pricing Structure For Dairy Farmers

The UK supermarket Tesco has released the new price it will pay British dairy farmers for six months from November 1, following an independent cost tracker review by agriculture research consultancy Promar.

Tesco Sustainable Dairy Group (TSDG) members will be paid 32.01 pence per litre (ppl) for their milk i.e. Tesco dairy farmers will soon receive a price above the market average.

The new price covers all of Tesco's own-brand fresh and filtered milk (1, 2, 4, 6 pint and 1 and 2 litre – excluding organic milk) and single, double & extra thick double cream (150, 300, 600 ml) products. The price includes 0.5ppl for sharing cost data with Promar International.

Tesco said that it continues to guarantee that TSDG famers receive a price that reflects the cost of production, calculated from costs submitted to Promar, ensuring that their businesses are profitable and enabling them to invest in the future.

"The new price follows four consecutive increases since 2012, takes into consideration a reduction in the cost of feed, and is agreed in collaboration with farmers on our TSDG committee," said the retailer.

"Customers can be assured that every pint of own-brand milk they buy from Tesco is helping to deliver a sustainable future for the British dairy industry, and that the price we pay our farmers is completely independent of the retail price for milk."

Speaking on the new pricing scheme, Tom Hind, agriculture director at Tesco said: “Over the past seven years we have worked in partnership with our dairy farmers to deliver a fair price for their milk. By agreeing a clear price, based on costs of production, for a period of six months, we are able to offer our farmers real stability and confidence in a changeable market.’

James Stephen, Aberdeenshire TSDG dairy farmer and Committee Chairman added: “In these times of volatile milk prices the relative stability of the cost tracker model is of huge benefit to TSDG farmers in budgeting and giving confidence for the future.”

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