Tesco raises price paid to dairy farmers

Tesco has increased the price it pays dedicated dairy farmers for their milk, to account for higher costs of production.

It announced a rise of 0.32p/litre from 1 February, for farmers supplying the Sustainable Dairy Group, taking its standard price to 28p/litre – or 28.5p/litre for producers who are signed up to Promar costings. The rise followed an interim review, triggered by sharp increases in farmers’ costs of production.

“The result of the Tesco Sustainable Dairy Group interim price review has highlighted an increase of 0.32p/litre in the cost of production, to 28.0p/litre, primarily driven by the cost of feed,” said a spokeswoman.

Between October last year and February, prices increased by 1.6p/litre to cover higher input costs.

“Against a background of volatility in the marketplace over the past months and recent weeks, Tesco is committed to base the price paid to its dairy farmers on the cost of production.”

The group normally met every six months, and would review prices again at the next scheduled meeting in March.