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July 23, 2012

UK: Co-op further increases milk price

The Co-operative Group has announced a further increase to the premium it pays to farmers who are in its liquid milk pool.

The Co-operative Group has announced a further increase to the premium it pays to farmers who are in its liquid milk pool.

The news comes as a further sign UK retailers are ready to compromise on the price they pay for milk in the face of mass protests from farmers who claim they are not being paid the cost of production. Asda and The Co-op have both previously announced increased payments. Morrisons, another UK retailer that has faced criticism, said on Friday (20 July) it plans to announce changes to the way it pays its milk farmers.

How much farmers are paid for the milk they produce has made national headlines in the UK in recent weeks. Farmers have blockaded processors depots and retail distribution sites in protest.

The catalyst for the protests was a series of price cuts from the UK’s largest dairy processors. Dairy Crest, Arla Foods and Robert Wiseman have announced a series of price cuts that are set to take the farmgate price of milk down by 3.65 to four pence per litre on 1 August.

Pressure for more returns to be passed down the supply chain has largely fallen on supermarkets, as farmers concede that milk processors are also facing significant margin pressure and struggling to turn a profit.

The Co-p said the premium that its liquid milk suppliers will receive will rise to 2.57ppl with immediate effect and to 4.27ppl from 1 August, following processor reductions. This brings the price Co-op farmers are paid to 29ppl. However, farmers claim the cost of production is 30ppl.

In addition, farmers have been keen to emphasise the premiums paid by retailers only extends to liquid milk supplies – which is around 30% of the milk that supermarkets buy. UK retailers continue to buy other milk-based products at prices that fail to cover production costs, farmers insist.

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