First signs of blinking from the milk retail giants

By ANDREW ARBUCKLE
Published on 18/07/2012 00:00

A FEW cracks emerged yesterday in the battle involving milk supplies in the UK, with one of the major retailers accused of treating dairy farmers unfairly, Morrisons, indicating that it was considering “new contractual arrangements” for its dairy suppliers

The company said it was looking at “other models we could use to better support dairy farmers”.

This was followed by another major retailer, Asda, indicating that it was going to increase by 2p per litre the price paid to their pool of producers. This announcement was made just hours before the supermarket giant’s Paul Kelly gave evidence to the House of Commons agriculture committee.

Also giving evidence to the committee was Mike Sheldon of processor Dairy Crest. Earlier in the day, at the company’s annual meeting – where it announced a reduced profit of £10 million on a £1.069 billion throughput in its dairy business – company chairman Anthony Fry said the termination clause on its supplier contracts would be reduced from 12 months to three months.

Commenting on these moves, a spokesman for NFU Scotland said they signalled a “much-needed change in the direction of travel” from some within the dairy supply chain. But he added that others must follow. “They must also be seen as a stepping stone to the wider, more fundamental reform that the sector desperately requires,” he said.

He added that part of this reform could be achieved by the code of practice being negotiated for the sector – but later, at the agricultural committee meeting, the code was comprehensively rejected by Kelly.

The union spokesman also commented on the Asda move, saying that it would bring relief but “it will still leave them receiving a price that offers limited scope for profitability and reinvestment in the business”. “Retailers also need to wake up to the fact that sitting back and seeking kudos for supporting a dedicated pool of liquid milk suppliers helps some but does not support the wider dairy industry long term,” he added.

A Scottish Government spokeswoman said: “This is a small step in the right direction and we hope the other main players in the supply chain will now take rapid steps to bring about some much-needed stability and profitability for our hard-pressed primary producers.”

Meanwhile the direct action group Farmers For Action announced that it would be taking a number of steps to highlight the present crisis, inclouding blockading milk tankers on farms for up to 48 hours. If that did not bring the desired result, the group would then target processors who did not sign up to a voluntary declaration to pay farmers the cost of producing milk.

A third strand to their campaign would be to picket supermarkets, including Farm-foods, Morrisons, Asda, Iceland, Aldi and Lidl.

One picket unrelated to FFA took place earlier this week at a Morrison’s supermarket in Welshpool in Wales.