UK retailer Asda will increase the premium it pays the farmers who supply its liquid milk through the Arla Foods Milk Partnership.
After demonstrations targeting Asda for paying below the cost of production, Asda has bowed to pressure and increased the premium it pays farmers from 1ppl to 3ppl.
The company said that the move would "offset" Arla's recently announced plan to reduce the farm-gate milk price by 2ppl from 1 August. However, previous to this cut, Arla had already lowered the milk price by 2ppl. Farmers have demanded that both these cuts are reversed, threatening protests that could disrupt the UK's milk supply if action is not taken.
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ASDA ACTS TO SUPPORT ITS DAIRY FARMERS BY INCREASING MILK PREMIUM TO 3PPL
Asda announces it will increase premium paid to 272 dedicated Dairylink farmers from 1ppl to 3ppl from 1st August
Increased premium worth an additional £30,000 per year to average Dairylink farmer
Asda set to utilise new multimillion pound butter processing facility to provide route to market for cream
Asda announced today (Tuesday 17th July) it will increase the premium it pays its dedicated farmers from 1ppl to 3ppl from 1st August. This will mean Asda Dairylink farmers will continue to be paid 27.5ppl litre for the milk they produce for Asda, offsetting the cut in farmgate prices previously announced by Arla.
The additional premium is equivalent to on average, around £30,000 per year for a Dairylink farmer supplying Asda with milk, and means the price they receive per litre will not reduce on 1st August as previously feared.
Asda's decision to act follows a series of meetings held with its farmers and their representatives over recent days and weeks. As a result Asda is set to significantly increase the premium it pays for its milk, while investing in the long-term security of the supply chain.
Karl Martin, Asda's commercial director for dairy said: "We have listened to the concerns of our dedicated dairy farmers and recognise the financial pressures they are currently facing. As a result, from 1st August we will increase the premium we pay from 1ppl to 3ppl.
"Over the last eight years, in partnership with Arla, we have worked extremely hard to build an open, honest and transparent relationship with our farmers. We pride ourselves on listening and acting positively whenever necessary in order to ensure we operate within a sustainable supply chain."
In order to provide UK dairy farmers with a market for the excess cream they produce, Arla has expanded its butter processing facility in Westbury, Wiltshire adding new production lines to the plant. This will enable Asda to purchase significantly more British butter from Arla.
Karl Martin added: "We are fully aware that the liquid milk we purchase is only half the story. A significant amount of the cream produced by the dairy industry in the UK is sold on the global commodity market. In order to improve returns to farmers, Asda is committed to driving retail sales of British butter and cream. "
