Tesco has announced it is to raise the price it pays to its milk suppliers by just over a penny a pint.
From the start of October, farmers who are members of Tesco’s Sustainable Dairy Group will receive a new rate of 28.18p per litre.
The new price is an increase of 1.28p on Tesco’s previous rate and is also significantly higher than the average price paid by Sainsbury’s, Asda and Morrisons in July (25.77p per litre).
Tesco board director, Lucy Neville-Rolfe, said: “This new price remains considerably above the current market value and reflects the transparent way we work with the dairy industry.”
“We remain committed to ensuring British dairy farmers receive a fair price above the cost of production for the milk they supply to Tesco .”
The move was welcomed by the National Farmers Union (NFU), which said it was “extremely encouraging” to see Tesco’s commitment to its pricing formula.
It is hoped the increase will trigger price rises across the board by other processors.
Tesco’s milk price rise comes after shares in leading dairy company, Robert Wiseman Dairies, dived yesterday as the company warned that intense competition from local rivals and supermarkets would affect its profits over the next 18 months.
In a trading statement, the Scottish milk producer said operating profits could drop by around £7m in the second half of the year and by around £16m in the financial year to March 2012 due to “recent intense competitive pressures across all sectors of the market”.
Analysts said business at Robert Wiseman Dairies was being affected by aggressive supermarket pricing tactics.
