Tesco’s decision to cut the price of its four pint bottles of milk to just £1 could result in a retail “price war” in the UK, protest group Farmers for Action (FFA) has warned.
The company, Britain’s largest retailer, announced earlier this week that it was cutting the price of a four pint (2.27 litres) bottle of milk from £1.39 ($2.32, €1.69) to £1 ($1.67, €1.22) as part of drive to reduce the amount paid by consumers for staples. It also recently slashed the price it charges for tomatoes, onions, peppers and cucumbers.
Speaking with DairyReporter.com, FFA chairman, David Handley, branded its most recent move “irresponsible” and warned that as a result, “a price war is about to kick off.”
“I have spoken with a number of retailers, who have all indicated that they won’t allow Tesco to get ahead, and will follow suit,” he said.
“Most of them said that they will be reviewing the situation to establish whether it will be long-term or short-lived. If it is a medium or long-term plan, they said that they will have to go back to their processors and negotiate.”
“This is not good news,” said Handley.
Handley claimed that Tesco plans to extend its price reduction efforts to other dairy products.
"Hit by this decision"
In its 3 March 2014 announcement, Tesco attempted to assure consumers that its new lower milk price would have no impact on the 650 milk farmers that make up its Tesco Sustainable Dairy Group (TSDG).
“We promise that our farmers will always be paid a fair and independently agreed price for their milk," said John Scouler, Tesco's commercial director, in the statement.
"When our customers buy their milk at Tesco, they can be confident that its responsibility sourced and at a fair price for all,” said Handley.
Commenting on the promise made by Tesco, Handley questioned why there was "no mention of the other 9,000 dairy farmers that supply their rivals."
“These are the farmers that are going to be hit by this decision,” said Handley.
“They are trying to con the general public into thinking that this decision won’t affect the farmers.”
“Protests will begin”
Handley has confirmed that while British retailers review the situation, FFA is preparing to hit the streets.
“The discussion has already taken place,” said Handley. “If this price cut is a medium or long-term plan, protests will begin.”
“Within the next 10 days or a fortnight, we will be outside Tesco distribution centres.”
The farmer organisation is no stranger to protest. In recent years, FFA have targeted British dairy processors, including Arla Foods and Muller Wiseman Dairies, and retailers, such as Morrisons, for their part in driving down milk prices.