Retailers risk fresh wave of dairy protests

Farm leaders have warned major retailers that they risk a new wave of dairy farmer protests this autumn unless they pay more for milk.

The first signs of unrest came last Thursday (21 October) when farmers blockaded a Tesco depot near Southampton in protest over continued poor farmgate milk prices.

Although the UK’s largest retailer has a premium contract worth more than 28p/litre to farmers supplying its own-label milk, those supplying the rest of Tesco’s fresh milk, cheese, butter, yoghurt and dairy desserts are less well compensated.

The average milk price for the UK remains below 25p/litre, about 3p below the cost of production, according to NFU Scotland calculations.

President Jim McLaren said: “Faced with a winter of spiralling costs and unsustainable milk prices, frustration among dairy farmers is reaching boiling point.

“That anger is justifiably focused on a dairy supply chain that continues to poorly serve those at the milk production end. With the price of feed, bedding, fertiliser and fuel all on the way up, it now costs a farmer almost 28p to produce a litre of milk.”

The union is holding talks with major retailers to press for fairer supply chain relationships. It says major supermarkets make considerable amounts of money out of milk, cheese and butter, as shown in DairyCo’s recent study of dairy supply chain margins.

That report showed retailers had increased their margin on liquid milk from 29% to 34% in the past year, while mild Cheddar margins rose from 47% to 51%.

“Major retailers have it within their gift to ensure that a fair share of that profitability is available to go back down the chain to those who are milking cows, day in day out, without the need to ask the consumers to pay any more for their food,” said Mr McLaren.

“Retailers cannot continue to stick their heads in the sand over this issue. Continually squeezing the primary producer will only heighten tension, see more choosing to leave the industry and add to frustration – and that is not in the interests of retailers, processors, farmers or consumers.

“Unless retailers start to address the issues then further protests are a distinct possibility.”