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| Version 0 | Version 1 |
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| Milk price row: the key questions | Milk price row: the key questions |
| (about 4 hours later) | |
| What is the dispute about? | What is the dispute about? |
| British farmers are unhappy that the price they are paid for milk has fallen by 25% over the past year. They are blaming supermarkets for the slump, and specifically the price war that has been caused by the “Big Four” – Tesco, Asda, Sainsbury’s and Morrisons – losing sales to the discounters Aldi and Lidl. | British farmers are unhappy that the price they are paid for milk has fallen by 25% over the past year. They are blaming supermarkets for the slump, and specifically the price war that has been caused by the “Big Four” – Tesco, Asda, Sainsbury’s and Morrisons – losing sales to the discounters Aldi and Lidl. |
| Asda and Morrisons have been targeted by protesters because they have failed to follow Tesco and Sainsbury’s in agreeing to pay a higher price for milk that is based on the cost of production. | Asda and Morrisons have been targeted by protesters because they have failed to follow Tesco and Sainsbury’s in agreeing to pay a higher price for milk that is based on the cost of production. |
| Why are farmers concerned? | Why are farmers concerned? |
| A 25% drop in the price of the product you sell is difficult for any business to deal with, but the problem is even worse for farmers because many are being forced to sell milk for less than it costs to produce. | A 25% drop in the price of the product you sell is difficult for any business to deal with, but the problem is even worse for farmers because many are being forced to sell milk for less than it costs to produce. |
| According to AHDB Dairy, the average farmgate price for a litre of milk is 23.66p. However, industry experts claim it costs farmers 30p per litre to produce milk. If this dislocation in prices continues, farms face financial ruin. Dairy farms have been closing at the rate of nine a week in the past year in England and Wales. | According to AHDB Dairy, the average farmgate price for a litre of milk is 23.66p. However, industry experts claim it costs farmers 30p per litre to produce milk. If this dislocation in prices continues, farms face financial ruin. Dairy farms have been closing at the rate of nine a week in the past year in England and Wales. |
| Protests have been taking place most years, why is this year different? | Protests have been taking place most years, why is this year different? |
| The price of milk is notoriously volatile, as is the relationship between supermarkets, milk processors such as Dairy Crest, and farms. However, the difference this year is the magnitude of the fall in milk prices, and the fact that there is a ferocious price war taking place between supermarkets, making them a lightning rod for criticism from angry farmers. | The price of milk is notoriously volatile, as is the relationship between supermarkets, milk processors such as Dairy Crest, and farms. However, the difference this year is the magnitude of the fall in milk prices, and the fact that there is a ferocious price war taking place between supermarkets, making them a lightning rod for criticism from angry farmers. |
| Related: Farming unions call for 'seismic change' in way food is sold in Britain | Related: Farming unions call for 'seismic change' in way food is sold in Britain |
| Are supermarkets actually to blame? | Are supermarkets actually to blame? |
| Roughly 80% of UK milk is sold through retailers, with the remaining 20% used in ingredients for other products, so they are clearly vital customers for farmers. | Roughly 80% of UK milk is sold through retailers, with the remaining 20% used in ingredients for other products, so they are clearly vital customers for farmers. |
| However, supermarkets have used milk as a weapon in the price war, boasting about cuts to prices. For example, according to mySupermarket, Morrisons has cut the price of a two-pint bottle of milk from 89p at the end of May to 74p. Not only that, but farmers are unhappy that the supermarkets do not promote British-sourced products and label them clearly. | However, supermarkets have used milk as a weapon in the price war, boasting about cuts to prices. For example, according to mySupermarket, Morrisons has cut the price of a two-pint bottle of milk from 89p at the end of May to 74p. Not only that, but farmers are unhappy that the supermarkets do not promote British-sourced products and label them clearly. |
| In response, the supermarkets claim that the fall in the price reflects declining commodity prices around the world and an oversupply of milk in Europe, partly caused by Russia’s block on western imports. | In response, the supermarkets claim that the fall in the price reflects declining commodity prices around the world and an oversupply of milk in Europe, partly caused by Russia’s block on western imports. |
| What will Morrisons new milk brand mean for shoppers and farmers? | |
| Morrisons has announced it will sell a new brand called Morrisons Milk for Farmers, which will allow shoppers the option of paying more for their milk to support farmers. A four-pint bottle of the new brand will cost £1.12, compared to 89p for Morrisons existing own-brand milk, which will remain on sale. The extra money will go directly to 3,000 dairy farmers who work with Arla, Morrisons main supplier. | |
| However, campaigners have warned that this is not enough to end the crisis, and will hold further talks with Morrisons aimed at winning more concessions from the supermarket chain. | |
| Are all the supermarkets the same? | Are all the supermarkets the same? |
| Not at all. The best big stores have agreements in place to buy milk with guaranteed prices – with around 30p per litre deemed the minimum – but this only covers around 14% of milk sold for home consumption. | |
| Waitrose, Tesco, Sainsbury’s and M&S, are considered the good – or at least, the better – guys because 100% of their own-brand milk is bought under fair trade deals. Waitrose pays 32.1p per litre, while Tesco pays 31p per litre – but the fair trade deals they have in place only cover their own brands of milk. Other milk products such as cheese and yoghurt are mostly not covered. | Waitrose, Tesco, Sainsbury’s and M&S, are considered the good – or at least, the better – guys because 100% of their own-brand milk is bought under fair trade deals. Waitrose pays 32.1p per litre, while Tesco pays 31p per litre – but the fair trade deals they have in place only cover their own brands of milk. Other milk products such as cheese and yoghurt are mostly not covered. |
| M&S on 1 June cut the price it paid suppliers to 32.8p. Sainsbury’s pays 30.9p per litre. | M&S on 1 June cut the price it paid suppliers to 32.8p. Sainsbury’s pays 30.9p per litre. |
| Who is the best? | Who is the best? |
| Related: Milk price row: farming union leaders meet Morrisons bosses | Related: Milk price row: farming union leaders meet Morrisons bosses |
| In May 2014, Booths launched a Fair Milk scheme, pledging to pay the highest prices to farmers. The chain, which has more than 30 stores across the north pays 33p per litre, the highest price among the big retailers - 10p per litre more than the worst-paying stores. | In May 2014, Booths launched a Fair Milk scheme, pledging to pay the highest prices to farmers. The chain, which has more than 30 stores across the north pays 33p per litre, the highest price among the big retailers - 10p per litre more than the worst-paying stores. |
| What about the Co-op? | What about the Co-op? |
| The big player in the convenience sector raised prices for farmers in 2012 but has since cut back. It now pays 28.3ppl to its 200 dedicated farm suppliers, which is better than the worst offenders, but still less than the 30p that farmers demand. | |
| Which shops should I avoid? | Which shops should I avoid? |
| Morrisons, Aldi, Lidl and Asda have been singled out by farmers as not paying a fair price – or hiding behind the fact that they buy their milk from the big producers, who pay well below the 30p fair price. Arla, a milk co-operative, which is owned by farmers, cut the price it pays for milk to 23p. It supplies a number of stores and has its own brand of milk. | Morrisons, Aldi, Lidl and Asda have been singled out by farmers as not paying a fair price – or hiding behind the fact that they buy their milk from the big producers, who pay well below the 30p fair price. Arla, a milk co-operative, which is owned by farmers, cut the price it pays for milk to 23p. It supplies a number of stores and has its own brand of milk. |
| Is buying from the doorstep delivery service better? | Is buying from the doorstep delivery service better? |
| Yes and no. Last week, Dairy Crest, the UK’s biggest milk processor, cut its price by 1.4p to just under 22p, way below the 30p guide. However, small independent members often pay better rates - as many are connected to a dairy - and paying fair prices. | Yes and no. Last week, Dairy Crest, the UK’s biggest milk processor, cut its price by 1.4p to just under 22p, way below the 30p guide. However, small independent members often pay better rates - as many are connected to a dairy - and paying fair prices. |