Tesco under fire again over dairy contract claims

Tesco faces further accusations that it is putting profits before producers, just days after the government’s supermarket watchdog found it guilty of treating suppliers unfairly.

Dairy farmers claim Britain’s biggest supermarket is on the verge of inflicting further pain on the sector by changing how it sources liquid milk. They fear that Tesco’s latest tendering process will see 200m litres of business removed from Arla and a greater share given to Muller Wiseman.

Farmers For Action (FFA) chairman David Handley said such a move would pile pressure on farmgate prices for non-aligned producers because it would leave Arla – the UK’s largest farmer-owned co-op – with extra milk to process through its Westbury plant.

He added: “This will be one of the darkest days ever for British dairy farmers.”

Both Arla and Muller have declined to comment.

See also: Tesco guilty of widespread payment delays to suppliers

The warning comes in the same week Tesco was found to have breached the groceries code of practice by delaying payments worth millions of pounds to suppliers. Adjudicator Christine Tacon said Tesco had prioritised its own finances over treating suppliers fairly (see Business p18).

Tesco has apologised for breaching the code but declined to comment on the latest accusation. A spokeswoman confirmed that the company had regular conversations with its processors and suppliers. But she added: “This is speculation and we don’t comment on speculation.”

There is no suggestion that Tesco is breaching the code this time round, but any move that drives down milk prices would be devastating for milk producers.

NFU dairy board chairman Rob Harrison urged Tesco to set the record straight on its intentions, saying it was important that milk producers knew where they stood. He added: “Rumour and speculation about changes to dairy contracts is unsettling and unhelpful.

“We call on Tesco to clarify its position as soon as possible. Any announcement from Tesco that impacts our members’ contracts will be reviewed very carefully by the NFU. If there are changes to contracts, our members will expect to be given fair and appropriate notice of these.”

Farmers who had been loyal Tesco suppliers deserved an indication of the options available to them, said Mr Harrison. “We would urge all those involved to ensure any changes do not disadvantage any dairy farmers or put them in a position that they will experience further suffering.”

In a message published on Facebook, FFA said Tesco should continue to source 50% of milk from a farmer-owned co-operative if the retailer wanted to avoid thousands of farmers visiting its stores to talk to customers or to shut down distribution sites.

“We are not prepared to sit back and accept what you are doing,” said the Facebook message. “You can issue writs, threaten legal action, you can do what you like because we are about to fight to stop our industry being destroyed by you, a major retailer.”

Mr Handley said 1,000 farmers had already pledged to march on London if necessary in the next few weeks. It would be an opportunity for the prime minister to hear what ordinary, hardworking farmers had to say, he added.