Tesco, Arla and Müller increase milk payments to British dairy farmers

By Jim Cornall

- Last updated on GMT

Tesco, Arla and Müller increase milk payments to British dairy farmers

Related tags Arla Arla foods Müller Milk Tesco

UK retailer Tesco is increasing the price it pays for all its fresh milk.

The 520 British dairy farmers that make up Tesco’s Sustainable Dairy Group (TSDG) are set to benefit from a near 20% rise for every liter they supply the retailer, with the price increasing from 34.16p ($0.45) per liter today to 40.84p ($0.54) per liter in May. TSDG farmers will also see an interim price rise in April to address the current levels of on-farm inflation.

The price Tesco pays its farmers for its fresh milk is independently set on a quarterly basis and takes into account inputs such as feed, fuel and fertilizer.

Tesco set up the TSDG 15 years ago to address uncertainty and volatility in the dairy sector.

Since November 2007, Tesco has paid £300m ($394m) over market prices to its dairy farmers. The company said this means its farmers have been able to invest in animal health and welfare, carbon reduction initiatives and biodiversity improvements.

Dominic Morrey, Tesco commercial director for fresh food said, “At a challenging time for the agriculture sector in the UK, we’re pleased to be offering our dairy farmers a significant increase in the price we pay for our fresh milk. Our farmers work incredibly hard to provide quality, fresh food to our customers, and we recognize the critical role they are already playing in helping to transform the food industry, as we tackle issues such as climate change and food security.

“Set up in 2007, the TSDG embodies our partnership approach with our dairy farmers and has enabled us to introduce innovations such as carbon foot-printing and biodiversity measures, as well guaranteeing quality British milk for our customers. We’re looking forward to supporting the industry for many years to come.”

Bill Higgins, TSDG committee chairman representing Muller said, “Following the extreme volatility we as farmers have faced in recent months. Tesco has stepped forward to help us adapt the TSDG model to better reflect and support us through these unprecedented times.  This only goes on to strengthen our 15-year collaborative relationship.”

Müller confirms 40ppl May farm gate milk price

Dairy farmers supplying Müller who meet the conditions for Müller Advantage will receive a milk price of 40ppl ($0.53) from May 1, 2022, a 3.5ppl increase.

Rob Hutchison, chief operating officer at Müller Milk & Ingredients said, “As the whole dairy supply chain faces into the challenge of unprecedented increases in costs, we will continue to do everything that we can to support farmers who supply us.

“We will continue, as ever, to closely monitor all of the factors which influence farm gate milk price in the coming months. Müller Advantage aims to improve supply chain collaboration, herd health and reductions in environmental impact and 99.5% of eligible supplying dairy farmers have opted to commit to the program.”

Arla confirms milk price increase for April

Danish cooperative Arla Foods amba is also upping its prices. There will be an increase of 0.5 euro cent to the Arla on-account price for conventional and organic milk from 1 April, 2022. However, this will be negatively impacted by 0.12 pence per liter quarterly currency adjustment, meaning that Arla’s farmgate milk price for the standard manufacturing liter will increase by 0.34 pence per liter to 39.72ppl ($0.52) for conventional and 47.17ppl ($0.62) for organic milk.

Arla Foods amba board director, and farmer owner, Arthur Fearnall, said, “While commodity prices continued improving in February, and an increase in the farmgate milk price is welcome, we cannot get away from that fact that the cost of producing milk is continuing to increase like never before.

"The pressures on farm are ever mounting as our farmers owners try to balance continued significant inflationary costs, with ensuring and investing in industry leading standards in animal welfare and sustainability to meet consumer demand. These pressures are being felt everywhere and while a positive outlook is welcome, there are still some unknown impacts of the war in the Ukraine.”

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