Morrisons has responded to soaring farmgate milk prices by increasing the price of a four-pint bottle of milk by 10p.
The supermarket, which once bore the brunt of farmer protests over low retail and farmgate milk prices, this week hiked the cost of its standard own-label four-pinter from £1 to £1.10, while the cost of a four-pint bottle of its flagship Morrisons Milk for Farmers range rose from £1.23 to £1.33 [BrandView.com].
The move was welcomed by NFU dairy board chairman Michael Oakes, who said it was positive the price was now closer to “reflecting the true cost of milk production”.
The 10p rise represents the biggest increase for a four-pint SKU of milk in the major supermarkets since before the start of the supermarket price war on milk in 2014. However, at the time of writing, Amazon - which also sells the standard own-label Morrisons four-pinter through its Amazon Fresh service - had yet to increase the SKU’s retail price.
Morrisons’ decision to increase prices follows a sustained period of tight supply across the dairy sector, with commodities such as butter seeing huge wholesale increases.
Although average milk deliveries have risen in recent months, with year on year levels up 2.6% on 14 October, they were still down 5.6% on October 2015 levels [AHDB]. At the same time, average farmgate milk price for non-supermarket aligned milk suppliers in Great Britain rose by 44.3% to 29.41ppl between August 2016 and August 2017.
A Morrisons spokesman said the retailer aimed to “hold prices down”, but it needed to “respond when there are ongoing cost pressures”.
The NFU’s Oakes hoped Morrisons’ competitors would also increase their prices in due course. “History shows that if one goes others will follow, customers are prepared to pay more for their milk,” he added.
The rise comes two months after Morrisons decided to ramp up its support for British dairy farmers with a new dedicated milk supply group, new welfare commitments, and a pledge only UK farmers would benefit from the 10p a litre premium paid from its Milk for Farmers range.