Retailers still under pressure over milk price-role

By Neil Merrett

- Last updated on GMT

Related tags: Dairy, Milk

British retailers are facing calls to increase support for the country’s dairy farming sector amidst wider European concerns about the role of stores in maintaining a profitable milk supply.

The National Farmers’ Union (NFU), a UK-based lobby group, says it has written to retailers and other major food service groups across the country to help find a solution to ensure all stakeholders in the dairy industry are attaining more profitable incomes.

Despite certain retailers’ claims that they are engaging suppliers and cooperatives to better support dairy farmers, European Farm groups have instead called for the implementation of a ‘fair-trade’ style of milk pricing to alleviate cost concerns.

Short changed claims

Back in February, Sieta van Keimpema, vice president of the European Milk Board (EMB), claimed farmers and processors were being short changed by major supermarket groups that have continued to profit at the same time suppliers struggle to cover costs.

Little since seems to have changed from the EMB’s perspective, after the lobby group last week suggested that ongoing market deregulation in the block is distorting the supply chain in favour of retailers.

"In this way the EU-Council has given them [retailers] even more power and once more shifted the balance to the detriment of the farmers,“​ stated EMB president Romuald Schabe.

British calls

However, in attempts to try and boost British milk production, the NFU is calling on the country’s main retailers to back three national commitments.

These commitments include pledges to source British dairy products, a pricing mechanism that can provide milk and cheese suppliers with sustainable milk prices to help meet costs and promotion of the Red Tractor logo on British private label products.

Gwyn Jones says that retailers are compounding the concerns of global farmers, which he claims are struggling to earn a living from milk production. Jones says this is especially true of markets like Britain, which he says are committed to high welfare and environmental standards.

"Consumers are paying a fair price for British dairy products but that money is not distributed fairly down the supply chain,”​ he states. “The difference between profit and loss for dairy farmers in this country is a small fraction of the overall margin on milk and dairy products, which could easily be afforded."

Retailer commitments

Despite calls for greater support, retailers across the bloc have pledged various commitments to farmers as part of their attempts to support dairy production and alleviate recent criticisms.

In outlining its own plans for securing dairy supply, Justin King, chief executive for UK retailer Sainsbury’s said earlier this year that, although it will continue to invest in its dairy farmers, it did not believe a contractual price would benefit the industry in the long-term.

The EMB itself has also conceded that following strikes by dairy producers last year, Germany’s more discount-focused retailers had worked in favour of supporting farmers with a revised milk price, albeit it on a temporary basis.

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