Morrisons forced to back down on milk price cuts Monday, 23rd July 2012

The UK’s fourth largest supermarket chain has announced it will pay at extra 5p per litre as farming minister Jim Paice warns “there will be no milk” under the new reduced prices.

Morrisons on Saturday became the largest retailer to acknowledge what farmers are describing as “unsustainable” cuts to milk pricings in supermarkets. The grocer said it would pay a 2p-a-litre premium on top of what the processors pay, with an extra 3p per litre offered after the bad weather conditions exacerbated the industry’s troubles.

Last week hundreds of farms began to blockade the gates of the three main milk processors, Arla Foods, Dairy Crest and Robert Wiseman Dairies after it was revealed that a change in milk pricings due on 1 August would leave farmers with between just 24p and 25p a litre.

Farming minister Jim Paice hit out at the proposed changes in supermarket pricings:

"The big problem that we face is what I view as the absurd level of price-cutting by some retailers... The reality is that such a price is completely unsustainable. Such retailers need to understand that if they go on like that, there will be no milk.

"There is no country in the world that can sell bottled milk at the equivalent of 25p a pint by the time it has been through the processing chain. That is absurd; such retailers are biting off their nose to spite their face."

According to industry estimates, it costs farmers at least 30p to produce a litre of milk.

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Posted in Food, Retail Industry, supply chain Tagged morrisons, supermarket, retail, jim paice, farming, industry, milk price cuts, blockade, arla foods