Tesco, the UK’s largest milk retailer, has announced plans to offer direct contracts to dairy farmers and launched an initiative to raise the profile of locally sourced milk.
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The company has said it will raise the price milk producers receive per litre to about 22 pence. This, Tesco said, is the best price currently paid by a UK supermarket. However, the retailer emphasised that it had no plans to pass this increased cost onto consumers.
Tesco is also launching ‘Localchoice’ milk, which will be sourced from local farms and sold at Tesco stores in or close to their county. It will be slightly more expensive than regular milk, meaning smaller producers will be able to meet the proportionally higher cost of production.
Localchoice milk will be sourced from around 150 small family-owned dairy farms around the UK. A premium of up to 6 pence per litre more will be paid to these farmers, who can also take part in Tesco local marketing initiatives.
The National Farmers Union welcomed the announcement, with president Peter Kendall describing it as “the most significant and encouraging development in the dairy industry for a very long time”.
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By GlobalData
