Sainsburys to Pay More for Milk

Thu, 13 Sep 2007
 
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British supermarket chain Sainsbury’s has increased the price it pays farmers for milk by around 5p per litre, following a similar move made by rival group Tesco .

Tesco announced last weekend it would pay its farmers and milk suppliers 27.5p per litre.

Sainsbury’s milk is currently supplied by processors Robert Wiseman Dairies and Dairy Crest - which is made up of 200 farmers who, following the increase, will receive 26.5p per litre as of 1 October.

However, the new amount will still be a penny less than what farmers will receive from Tesco, although Sainsbury’s, unlike its competitor, is not committed to carrying out six-monthly price reviews .

Sainsbury’s has not ruled out bringing in further increases, but it remains cautious over the stability of the market.

The company’s new contract is also believed to place fewer conditions on its suppliers than those supplying Tesco .

Meanwhile Arla Foods UK, the dairy farmers supplying Britain’s second largest supermarket group Asda, will be waiting eagerly to see how the retailer responds.

It currently pays its suppliers 1p per litre over the processor’s standard price, although it is set to rise to 25p per litre in October – leaving Asda with three options.

The first is to claim that 26p per litre is enough and remain content to lag behind its competitors, or increase the premium it pays over the Arla price, or lastly pressure Arla to increase its base price.

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