According to DairyCo, three of the UK’s major food retailers have cut their retail milk prices. Tesco was the first retailer to do this – announcing on Monday that it was to lower the price of a four pint unit from £1.39 to £1.
The move by Tesco was shortly followed by Sainsbury’s, which introduced the same 39p price cut to £1 for a four pint unit, matching the price at these retailers to that of Asda and the hard discounters. The Co-operative has also reduced the price of its smaller units; its one pint unit has been reduced from 50p to 45p, whilst two pints now costs 85p, down from 89p. Despite a three-day flash sale on milk in January, during which time four pints could have been purchased for £1, the Co-op has said it will keep the price of four pints at £1.39, claiming a reduction in price could encourage food waste.
According to ESA Retail, UK retail prices have risen by 3.6% over the past year, to an average of £1.29 for four pints. The recent changes are likely to see the average retail price move closer to the price seen at the end of 2012.
UK dairy market analyst Ian Potter told AgriLand that the decisions taken by the retailers to cut the price of liquid milk is not a short term measure.
“The supermarkets are telling me that these initiatives are part of a long term decision making process. However, this week’s developments are unlikely to have a direct impact on farmgate returns. Arla is one of the biggest players in the UK milk procurement sector. The company is committed to delivering a strong producer price over the coming period, which the other processers will have to take full heed of, at the risk of losing significant numbers of their own producers.
Ian concluded:
“Arla has made it quite clear that it wants to further strengthen its producer supply base in the UK.”