September 28, 2011

UK's Tesco ups payment for dairy farmers

Farmers who are members of the Tesco Sustainable Dairy Group (TSDG) will receive GBX30.21 (US$0.47) per litre for their milk, an increase of GBX0.43 (US$0.01) starting October 1.

The retailer said it set the price according to the farmers' cost of production after receiving data from independent consultants and farmers.

Sean McCurley, Tesco's director of dairy, said, "We are delighted to be able to pay our farmers more for their milk, while offering lower prices on the essentials, which will help millions of families."

The news has been welcomed by farmers. A dairy industry source said that the movement is welcome news to dairy farmers because dairy farmers' costs have increased.

However, the source said farmers would like to see the price increase extended to farmers that supply milk to produce other dairy products.

The increase follows Tesco's Big Price Drop announcement last week that it would cut GBP500 million (US$782 million) from the price of thousands of items in the UK in a revamp of its promotional strategy.