April 4, 2007

UK's Tesco to boost British dairy industry
 

Tesco--UK's largest single retailer of milk--said it would offer direct contracts to around 850 farmers, raising the price farmers receive to around 22 pounds per litre, the best price currently being paid by any supermarket as a boost to the British dairy industry.

"The new contract prices will be reviewed every six months to make sure they reflect the farmers' costs of production and will be determined using key variables such as feed, fertilizer, energy and labour," Tesco said in a statement.

However, shoppers will pay no more for that milk than they do now, the company added.

The firm is also launching a new "local choice" milk, which will be sourced from local farms and sold at Tesco stores in or close to their county.

The product sell for slightly more per litre than standard milk meaning these smaller producers can make returns more in line with the proportionately higher costs of their business, according to Tesco. The National Farmers' Union (NFU) has welcomed Tesco's announcement, stating the development will "offer a new package for British farmers and a great opportunity to get closer to consumers as well as improving their business."