UK: Lidl ups milk price as focus shifts to middle-ground

By Katy Askew | 26 July 2012

Discount grocer Lidl has increased the amount it pays for milk in the face of protests from dairy farmers, who are shifting their focus from the UK's largest food retailers to pile pressure on the middle-ground market.

Lidl confirmed yesterday (25 July) it plans to make a payment of two pence per litre to farmers who supply it with liquid milk.

The move will come into effect from 1 August and is designed to offset price reductions proposed by the UK's largest dairy processors, Arla Foods, Dairy Crest and Robert Wiseman. The UK's three largest dairy processors have announced a series of cuts that will take the farmgate milk price down by a total of between 3.65ppl and 4ppl at the beginning of next month.

The price increase follows similar moves from Asda, Morrisons and The Co-operative Group, which have all come under fire for failing to pay a price for milk that covers the cost of production. The likes of Sainsbury's, Tesco, Waitrose and Marks and Spencer already operated a payment system linked to the cost of production.

A spokesperson for the National Farmers' Union told just-food this morning the coalition of farming organisations - including the NFU, its Scottish and Welsh counterparts and Farmers For Action - is increasingly targeting the middle ground market, which includes the discount retailers Aldi and Lidl as well as foodservice operators and institutional buyers.

"We saw the move by the supermarkets - the likes of the Co-op, Asda and Morrisons - so it is the middle ground that we are now looking at," the spokesperson said.

The 2ppl increase, which echoes an earlier increase from fellow discounter Aldi, is a "step in the right direction" but the NFU and other farming organisations would "like to see them increase it more", the spokesperson said.

A spokesperson for Lidl emphasised the retailer "had no influence on these proposed cuts" but insisted its decision to pay a price premium demonstrated the group's commitment "to support British farmers".

The spokesperson declined to comment on whether Lidl would consider a further increase in milk payments, but emphasised the group's value business model and focus on low prices meant "operating on lower margins than the larger food retailers".

The spokesperson declined to comment on whether the increased milk payment would be seen by consumers at the tills. 

Sectors: Dairy, Private label, Retail

Companies: Lidl, Asda, Morrisons, Arla Foods, Dairy Crest, Aldi, The Co-operative Group, Sainsbury’s, Tesco, Waitrose, Marks and Spencer

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