The retailer already has a relationship with farmer-owned cooperative, Arla, for liquid milk but a new three-year agreement guarantees increased volumes.
Arla has just opened what it claims to be the most efficient milk processing plant in the world in Aylesbury, where the retailer’s fresh milk is processed and Morrisons said it believed this investment will lead to stronger returns for Arla farmers in the long term.
A price squeeze blamed on a significant fall in the global trade of milk means British dairy farmers are going out of business on a weekly basis, with now less than 10,000 left operating for the first time. It prompted a group of MPs to today publish a report which urged the government to give more powers to the Groceries Code Adjudicator to protect dairy farmers.
While Morrisons said it was reducing volumes of liquid milk sourced from Dairy Crest, the processor will continue to supply Morrisons with high volumes of cheese, butter and soft spreads.
The agreements bring closer Morrisons’ ambition to start a hedge scheme that will help a group of farmers to manage the volatility of their milk price, the retailer said.
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.”