Farmers’ union welcomes move by UK’s biggest retailer to pay price based on cost of production as significant…

Tesco has agreed to increase the amount it pays farmers for milk used to produce cheese, in a major victory for the dairy industry in its battle with supermarkets. Britain’s biggest retailer will pay farmers a price based on the cost of production in what farming leaders described as a significant move. Tesco already pays a price linked to the cost of production for milk itself, but it is the first major supermarket to extend the link to cheese. The move means it will pay 29.93p per litre for milk in cheese over the winter period, according to the National Farmers Union. The NFU has said dairy farmers face a “state of emergency” after a 25% fall in the wholesale price of milk in the last year. The average farmgate price of milk stands at 23.35p a litre, below the estimated cost of production of 30p a litre.

Farmers blame supermarkets for the slide in milk prices, saying it has been used as a weapon in the industry price war and that retailers are not doing enough to promote British-sourced products. In protest they have blockaded distribution centres and herded two cows through an Asda store in Stafford. Read more.