Tesco triggers round of cuts as NFU warns of damage to farming at time when stability is returning after reductions two years ago
"We call them our girls," says David Strachan affectionately, watching the line of bright-eyed brown Jersey cows saunter obligingly from their cubicles – their indoor home during the chilly winter months – and into the adjoining milking parlour.
The modern, mechanised facility is a far cry from the days of milking by hand. But in other respects Marybelle, a family-run dairy business set in the heart of the Suffolk countryside, has deliberately retained old-fashioned traditions, such as low-intensity care of its award-winning pedigree Jerseys and Holsteins and an enviably short supply chain.
But Strachan, a third-generation farmer, is clearly not a happy man as he struggles to understand Tesco's decision as the UK's largest retailer to slash the price of milk from £1.39 to £1 for a four-pint carton in the latest battle to win shoppers. Like many of the UK's 10,500 dairy farmers he worries that the escalating price war will put the financial squeeze on his own business, at a time when stability is returning after price cuts two years ago.
"I am cross as it makes no sense to me," he says from the dairy in Rendham. "It is not as though consumers have been complaining about milk being too expensive. It's a good value product given everything that goes into it, and what Tesco is doing is sending out the wrong message to shoppers – to everyone. They are devaluing milk for, apparently, their own gain."
Tesco's aggressive move on Monday was matched two days later by Sainsbury's and by the Co-operative, cutting the price of one and two-pint bottles to 45p and 85p respectively. Waitrose followed suit on Fridayby reducing its four-pint bottles from £1.39 to £1 for customers holding the mywaitrose loyalty card. Asda, Aldi and Lidl have charged £1 for four-pint bottles for some time.
On Friday Morrisons upped the ante by cutting the price of its 2-litre carton Meadow Park milk from 97p to 84p.
The National Farmers' Union has warned that a supermarket price war could mean farmers losing out to protect retailers' profits. Pricing is a complex business – and depends on the individual farm and quality and fat level of the milk – but the NFU says the farmgate price (what farmers and processors receive from retailers) is an average of 17p per pint. Two years ago farmers organised blockades after the main processors tried to reduce the rate from 30p to 25p per litre.
Around half the milk produced on dairy farms is pasteurised for drinking while the rest is turned into cheese, butter, yoghurt and other dairy products. Many dairy farmers have been making a loss from milk for years.
Marybelle has aslo struggled to make money from milk and has diversified into cream, artisan yoghurts, creme fraiche and ice cream – a move which has sealed its reputation and attracted a slew of impressive national awards.
Its products are available throughout Suffolk, Norfolk and Essex, within a 60-mile radius of the processing plant, from farm shops and supermarkets, including Morrisons, Asda ,Waitrose and East of England Co-operative.
Half of the milk sold in the UK goes to schools, hospitals, coffee shops and restaurants. Strachan believes the price cuts could have a wider impact on his business: "A lot of my hotel and restaurant customers will see the reduced price flagged up and expect that from me as well. I don't have a sufficiently wide product range – or scale – to be able to offer that and absorb it. It is all very destabilising."
Tesco, Sainsbury's, the Co-op and Morrisons insist that the price cuts will not affect how much farmers are paid. Tesco even took out full-page adverts in national newspapers to say the price the 650 members of its Sustainable Dairy Group are paid will not be affected. But Strachan says this amounts to 6% of dairy farmers: "That's a drop in the ocean. What about all the others?"
With talk of reviving a national petition to publicise farmers' worries, the NFU is watching the situation closely. "Creating this impression or illusion that food is cheap is damaging on the agricultural industry and how the public view food," says Rob Newbery, its chief dairy adviser. "We do not want the price of food to be the ground on which the retailers go to war on each other.
"Farmers do not set retail prices but we will be monitoring the situation to ensure this short-term marketing effort does not have an impact on farmgate milk prices now and further down the line. Over the past 18 months or so we've seen the gap between what farmers get paid at the farm gate and the cost of producing milk closing, which has been encouraging. This is not good news for the industry." Reported by guardian.co.uk 4 hours ago.
"We call them our girls," says David Strachan affectionately, watching the line of bright-eyed brown Jersey cows saunter obligingly from their cubicles – their indoor home during the chilly winter months – and into the adjoining milking parlour.
The modern, mechanised facility is a far cry from the days of milking by hand. But in other respects Marybelle, a family-run dairy business set in the heart of the Suffolk countryside, has deliberately retained old-fashioned traditions, such as low-intensity care of its award-winning pedigree Jerseys and Holsteins and an enviably short supply chain.
But Strachan, a third-generation farmer, is clearly not a happy man as he struggles to understand Tesco's decision as the UK's largest retailer to slash the price of milk from £1.39 to £1 for a four-pint carton in the latest battle to win shoppers. Like many of the UK's 10,500 dairy farmers he worries that the escalating price war will put the financial squeeze on his own business, at a time when stability is returning after price cuts two years ago.
"I am cross as it makes no sense to me," he says from the dairy in Rendham. "It is not as though consumers have been complaining about milk being too expensive. It's a good value product given everything that goes into it, and what Tesco is doing is sending out the wrong message to shoppers – to everyone. They are devaluing milk for, apparently, their own gain."
Tesco's aggressive move on Monday was matched two days later by Sainsbury's and by the Co-operative, cutting the price of one and two-pint bottles to 45p and 85p respectively. Waitrose followed suit on Fridayby reducing its four-pint bottles from £1.39 to £1 for customers holding the mywaitrose loyalty card. Asda, Aldi and Lidl have charged £1 for four-pint bottles for some time.
On Friday Morrisons upped the ante by cutting the price of its 2-litre carton Meadow Park milk from 97p to 84p.
The National Farmers' Union has warned that a supermarket price war could mean farmers losing out to protect retailers' profits. Pricing is a complex business – and depends on the individual farm and quality and fat level of the milk – but the NFU says the farmgate price (what farmers and processors receive from retailers) is an average of 17p per pint. Two years ago farmers organised blockades after the main processors tried to reduce the rate from 30p to 25p per litre.
Around half the milk produced on dairy farms is pasteurised for drinking while the rest is turned into cheese, butter, yoghurt and other dairy products. Many dairy farmers have been making a loss from milk for years.
Marybelle has aslo struggled to make money from milk and has diversified into cream, artisan yoghurts, creme fraiche and ice cream – a move which has sealed its reputation and attracted a slew of impressive national awards.
Its products are available throughout Suffolk, Norfolk and Essex, within a 60-mile radius of the processing plant, from farm shops and supermarkets, including Morrisons, Asda ,Waitrose and East of England Co-operative.
Half of the milk sold in the UK goes to schools, hospitals, coffee shops and restaurants. Strachan believes the price cuts could have a wider impact on his business: "A lot of my hotel and restaurant customers will see the reduced price flagged up and expect that from me as well. I don't have a sufficiently wide product range – or scale – to be able to offer that and absorb it. It is all very destabilising."
Tesco, Sainsbury's, the Co-op and Morrisons insist that the price cuts will not affect how much farmers are paid. Tesco even took out full-page adverts in national newspapers to say the price the 650 members of its Sustainable Dairy Group are paid will not be affected. But Strachan says this amounts to 6% of dairy farmers: "That's a drop in the ocean. What about all the others?"
With talk of reviving a national petition to publicise farmers' worries, the NFU is watching the situation closely. "Creating this impression or illusion that food is cheap is damaging on the agricultural industry and how the public view food," says Rob Newbery, its chief dairy adviser. "We do not want the price of food to be the ground on which the retailers go to war on each other.
"Farmers do not set retail prices but we will be monitoring the situation to ensure this short-term marketing effort does not have an impact on farmgate milk prices now and further down the line. Over the past 18 months or so we've seen the gap between what farmers get paid at the farm gate and the cost of producing milk closing, which has been encouraging. This is not good news for the industry." Reported by guardian.co.uk 4 hours ago.