Tesco comes clean on milk supply switch

By Alice Foster

- Last updated on GMT

Tesco has confirmed plans to switch part of its milk supply
Tesco has confirmed plans to switch part of its milk supply

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Tesco has confirmed plans to switch part of its milk supply from Arla to Müller, after days of speculation, despite threats of direct action by militant farmers.

Last week Farmers for Action (FFA) threatened to declare war on Tesco​ and march on Westminster after claiming that the retailer was moving the supply of 200M litres of milk.  

Britain’s biggest supermarket said the move would build a “stronger future”​ for dairy farmers, but FFA argued that it would “decimate”​ the already struggling dairy industry. 

Tesco commercial director for fresh food Matt Simister said: “Tesco has a proud history of supporting British dairy farmers and this agreement withMüller Milk & Ingredients will create the most sustainable, progressive and customer-focused partnership in the dairy industry.” 

‘Significant volume’ of milk​ 

View from Arla

“While Arla is disappointed with the loss; Tesco continues to be an important and strategic customer.”​  

  • Peter Giørtz-Carlsen, executive vice president, Arla Foods UK

Milk processor Arla Foods said that a “significant volume” ​of its milk business had been awarded to Müller, which recently acquired Dairy Crest’s dairies. 

Arla Foods UK executive vice president Peter Giørtz-Carlsen said: “While Arla is disappointed with the loss, Tesco continues to be an important and strategic customer.”​   

The Farmers’ Union of Wales (FUW) warned that the supply switch could mean that non-aligned producers become more exposed to milk price falls. 

The union said: “The FUW would urge Tesco to ensure that its liquid milk procurement process does not function to further depress the prices received by non-aligned producers.”

Müller welcomes contract

But Müller Milk & Ingredients md Andrew McInnes welcomed the new milk contract with Tesco and offered reassurances to worried dairy farmers. 

“Farmers can be assured that we are committed to offering a leading standard milk price and contract proposition as well as supporting our retailer customers who wish to develop farmer supply groups with whom they can build closer relationships,”​ he said. 

The FFA planned to organise a more than 1,000-strong march on Westminster in March, as the dairy crisis continues. 

View from NFU

“This announcement from Tesco will obviously impact on some of our members’ businesses and we will review it very carefully.

​What we do know is that Tesco is continuing to show its long-term commitment to liquid milk through the Tesco Sustainable Dairy Group.   

“As with any change it is now absolutely vital that Tesco, Müller and Arla make it very clear to all their suppliers how they will be affected by this change.

​We need to ensure fairness and transparency throughout the supply chain for both aligned and non-aligned farmers.”  ​ 

  • Rob Harrison, dairy board chairman, National Farmers Union

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