‘Supermarket wars only serve to devalue milk’

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Agriculture leaders have hit out at the “devaluing” of milk by retailers, as First Milk heaped more pressure on the troubled dairy industry by announcing that its dairy farmers would be paid late.

Asda has become the latest retailer to drop its on-shelf price for four pints of milk to 89p amid supermarkets’ post-Christmas scramble to win shoppers.

While Asda said it would not pass on the difference paid at the tills to dairy farmers, who are paid by farmer co-operative Arla for the milk they provide to the retailer, the National Farmers’ Union (NFU) criticised the market signals the in-store price cut sent to other retailers.

Richard Pearson, the NFU’s regional director for the North East, said: “Such low retail prices not only devalue the product, they also send a very strong signal to the rest of the marketplace – all the more so as Asda is such a major player. It is vital that other retailers do not follow suit.

“We have just seen the number of dairy farmers nationally falling below 10,000 for the first time. And North Yorkshire has lost 55 dairy farmers in the last 12 months alone.”

In October, Iceland also announced it was selling four pints of milk for 89p and Aldi followed suit in November.

Asda said: “Customers expect great value from Asda especially after Christmas when they are feeling the pinch, which is why we have invested around £300m in lowering prices for our biggest ever Rollback, which includes milk.

“Asda is proud to support British dairy farmers and have a positive record in UK dairy sourcing for both milk and cheese. All our fresh milk is Red Tractor stamped as 100 per cent British and our own label butter and British cheese range uses British milk.”

But the farm gate price that farmers receive for supplying milk to Arla - who subsequently supply Asda, among others - continues on a downward trend that is replicated across the industry and has been since early last year.

From Monday, January 5 Arla members were set to be hit by a 2.03 pence per litre (ppl) price cut - down to 24.81ppl. Announcing the cut, Ash Amirahmadi. Arla’s UK head of milk and member services, said the move was necessary as global supply and demand for dairy products were still out of balance.

And this week, First Milk said that its suppliers - including 36 in Yorkshire - would have their milk payments, planned for January 12 deferred until January 26, with all future payments also being deferred by two weeks.

NFU president Meurig Raymond said: “This is a wholly unacceptable announcement from First Milk coming after last week’s announcement of a milk price cut, which I understand is partly to be reversed, with members now being asked to fork out an extra 1.5ppl in capital investment as well as receiving a delayed payment for milk already supplied.

“It is quite clear that this announcement will be a serious burden for farmers and will be damaging to cash flow at an expensive and demanding time of year for costs. It is essential at this time that banks understand and are supportive of our farmer members so they can continue to finance their businesses.”

Amanda Ball, head of communications at industry lobby group DairyCo, added: “There is no absolutely no doubt these are really challenging times for dairy farmers as the price paid for milk has fallen dramatically since April last year.

“Competition is currently fierce amongst the supermarkets and whilst some have explained the price cut lies with them for the benefit of the customer, farmers feel charging such low prices devalues what they take huge pride and care in producing.

“Visit www.thisisdairyfarming.com so you can see for yourselves the passion that goes in to every drop of milk.”