FDBusiness.com

Tesco’s decision to increase the price of its standard milk – a move followed by other supermarket groups Morrisons, Waitrose and Sainsbury – has effectively ended the milk price war in the UK grocery trade. The price war, precipitated by Asda in July, has already undermined profitability at British liquid milk specialist Robert Wiseman Dairies, which processes and delivers 30% of the fresh milk consumed in Britain.

Meanwhile, Peter Kendall, president of the National Farmers Union, the trade association representing UK farmers, has called on the Government to investigate the emerging dairy crisis. “It is clear to me, and the countless dairy farmers across the country who are trying to make a living, that this market just simply isn’t working,” he says. “Milk processors are carving each other up – at the expense of all dairy farmers – by making increasingly reckless undercuts in the market.”

He continues: “At the same time, supermarkets and other liquid milk customers are being extremely short-sighted by paying a milk price so low that some farmers aren’t even meeting their own costs of production. If these customers took the time to look over the fence at what’s happened to cheese prices, they’d realise that cheese production will soon be a more attractive and profitable market for milk. This will leave the liquid market starved of supply. There has to be something profoundly wrong in the market place for these things to be happening.”

He elaborates: “I believe money has been made but not shared back down through the supply chain to the farm gate. This cannot continue or we face seeing less investment, lower milk production, fewer farms and more and more imported dairy products on our supermarket shelves.”