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British Tesco uses some farmers from its own milk pool
The British supermarket chain Tesco is limiting the number of dairy farmers participating in the Tesco Sustainable Dairy Group (TSDG). The reason is the declining sales of drinking milk. The sad thing for farmers who are losing weight is that they will probably receive less milk money.
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Tesco does not want to say how many farmers are involved. Nor does it know what volume of milk is involved. According to the announcement, those who drop out can find their own alternative within twelve months from September. If not, they will be offered a regular purchasing contract with Müller UK. This means that they are expected to drop back in terms of milk money. Last year, Tesco said it paid out almost €47 million above the average British milk price to farmers in its own milk pool.
The TSDG was founded in 2007 with approximately 700 dairy farmers. Of these, 2023 were left in 447, Tesco reports. Due to an increase in scale among the stayers, the milk pool has remained roughly stable. However, British consumers are buying less and less regular drinking milk. That is why Tesco wants to divest some of its farmers. According to the supermarket chain, the advantage for those who stay is that they can sell a larger part of their milk production at Tesco.
The National Farmers Union (NFU) regrets Tesco's step and insists on a good transitional arrangement, but understands Tesco's motives. About half of British milk production still goes into drinking milk, a quarter is intended for cheese production, the rest for other products.