Farmers supplying milk to Sainsbury’s have improved quality, yield and animal welfare in the 10 years since it launched its Dairy Development Group, and seen their exposure to price volatility reduce by half the industry average, the retailer has said.
Speaking at an event this week to mark the group’s 10-year anniversary, Sainsbury’s agriculture manager Alice Swift said the 264 farms that supplied the supermarket with milk had seen price volatility fall significantly.
“Over the past decade the market variance has moved by [an average of] 14ppl, whereas our price has moved by just 7ppl,” she added.
“When our price is set annually every October our farmers know within a penny where their price is going to be for the next year and that is good for budgeting and forecasting for their business.”
The group had been founded when the market price for milk was at an all-time low, because Sainsbury’s had wanted a better understanding of the dairy industry to guarantee the milk quality and the welfare of its dairy herds, as well as the long-term sustainability of the UK dairy industry, Swift said.
Its creation had helped to deepen the retailer’s knowledge of its dairy supply chain, as it helped develop a holistic approach to dairy management while taking into account the amount farmers were paid, a more robust approach to herd health and increased investment back into farms, she added.
“Over the course of the 10 years we’ve taken a collaborative approach to managing the relationship we have with our dairy farmers, which has allowed us to establish initiatives and work in a way that delivers positive outcomes for our farmers and their cows,” Swift said.
“The feedback from our farmers is they appreciate the two-way dialogue. It has allowed us to build a level of trust that has led to a very open and transparent relationship, which has been key to the progress we have made as an aligned group.”
Other achievements included a 43% reduction in antibiotics classed as critically important to human health, better animal welfare outcomes and an increase in milk produced by cows, from 7,800 litres in April 2010 to 8,600 litres in April 2017.
Director of Sainsbury’s brand Judith Batchelar said: “We’ve achieved a huge amount with the Sainsbury’s Dairy Development Group, which is demonstrated by the significant increase in herd health and welfare outcomes.
“Stable pricing, through our cost-of-production model, results in increased farm investment, which means higher welfare standards resulting in improved efficiency and cost. This approach to dairy management means we are creating a sustainable supply chain that’s fit for today and the future.”