Tesco has stunned the market in the latest round of milk pricing talks by calling for processors to fund a 2p increase in prices paid to farmers.
Emerging from a meeting with NFU president Ben Gill, Tesco director John Gildersleeve said there was "a strong case for farmers to receive a significant price increase in the forthcoming negotiations with processors".
He also urged retailers and manufacturers to "examine their sourcing policy and do more to support the British dairy industry"by sourcing more milk and dairy products from British farmers. Processors were still formulating their responses as The Grocer went to press, but they stressed that market forces dictated milk prices.
Safeway director of communications Kevin Hawkins insisted the company had "not seen any benefit" from the 3.25p reduction in farmgate prices since April, and claimed processors had been "budgeting for an increase" for some time.
The NFU welcomed Tesco's statement, adding that farmers didn't care whose margins the rise came out of, as long as they got a fair return for their milk.
"We just want the words to be translated into action," said a spokesman
>> More on the crisis in this issue's Dairymen supplement