Sainsbury’s backs fair pricing for British dairy farmers

  • Customers expect farmers to be paid a fair price

  • Paying a price above the cost of production is vital for the long term sustainability of the dairy industry

  • Sainsbury’s Dairy Development Group (SDDG) farmers are incentivised for animal welfare and environmental excellence

As Peter Kendall, President of the NFU, called for action on British dairy prices and highlighted the problems in the wider dairy industry, Sainsbury's reinforced its commitment to paying a fair price to its farmers.

Mike Coupe, Group Commercial Director at Sainsbury's said: "For the last five years we've paid a premium to our farmers ensuring they receive a price that gives them a fair return. We saw that British dairy farmers were under huge pressure, with volatile input costs and uncertainty.

"Our farmers have a guaranteed, independently audited contract price. This protects them from the volatility of the market price and takes into account their costs. It ensures SDDG farmers can farm with confidence and stability.

"So whilst prices have been cut by others, we're bucking the trend by increasingthe price paid to our dairy farmers.  From 1st July, the standard litre price paid by Sainsbury's increased to 30.56ppl to reflect the increased input costs seen by our farmers.

"Customers expect farmers to be paid a fair price. We know it's in everyone's interests for us to help our farmers invest and ensure our milk is farmed to the highest quality, animal welfare and environmental standards.

"It's an example of how our values make us different and part of our wider commitment to source with integrity, including our pledge to double the amount of British food we sell as part of our 20 by 20 Sustainability Plan.

"Over the past five years we've invested £40 million through our industry-leading Dairy Development Group and seen significant advances in animal welfare and environmental standards, in turn saving our dairy farmers over £10 million.

"Our price is paid to our farmers regardless of the processor they use. It is of course a matter for the processor and the other companies they sell to, what price they pay for the other milk they supply."

Mansel Raymond, NFU Dairy Board Chairman continues: "Farm gate costs of production are currently over 30ppl, and rising.  With this in mind I'd like to congratulate Sainsbury's, whose cost of production model, which reflects feed, fuel and fertiliser inflation, will be awarding a price increase to farmers from 1 July.

"Dairy farmers need a sustainable future; further price cuts will jeopardise this and be met with real anger."

Sainsbury's Dairy Pricing: From 1 July Sainsbury's increased the price paid to British dairy farmers through the sustainable Cost of Production (COP) model. Our standard litre price rose to 30.56ppl. The first quarterly review uses data from Dairy Co Datum. The model was developed with independent consultants to suit all Sainsbury's farm types and sizes and ensure their sustainability and profitability in the long term.

Through the Sainsbury's Dairy Development Group (SDDG) a unique COP model designed to reward  SDDG farmers in England, Wales and Scotland for outstanding animal welfare and environmental standards was introduced from 1 May 2012.

Following an overwhelming majority vote the farmers now benefit from the most robust and transparent model available which forms part of Sainsbury's ground-breaking20 by 20 Sustainability Plan. The price was initially set at 30.30ppl but one of the unique elements of the COP is the quarterly review of feed, fuel and fertiliser. This will ensure that the most volatile elements of costs will be reviewed every quarter and the COP milk price changes to reflect these varying costs, in turn ensuring a fair deal for the 324 farmers involved.

Sainsbury's wider support to British farmers: Sainsbury's has nine farming groups across a number of agricultural areas. The dairy group is the most established, set up in 2005 and currently has 333 farmers. Other groups include Beef, Lamb, Pork, Chicken, Eggs, Cheese, Wheat and Produce and the nine groups allow farmers to share information and techniques and meet face to face with Sainsbury's.

Sainsbury's 20 by 20 Sustainability Plan: By 2020, Sainsbury's will source all key raw materials and commodities sustainably to an independent standard. The plan also includes doubling our British sales, being number 1 for animal welfare and putting all waste to positive use.

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