Tesco May Lose Milk Price War As Industry Set to Rebel

Ten days ago Tesco suddenly announced that it was to cut the retail price of a two-litre pack of Wiseman's Fresh 'n' Low milk from GBP 1.44 to GBP 1.06, much to the surprise of the dairy industry.

Inevitably all of Tesco's rivals have followed suit, sparking genuine fears of a price war, with farmers being the ultimate losers at a time when they have been arguing for an appreciably higher ex-farm price.

Tesco and its competitors are claiming that farmers will not suffer from the reduction in retail prices, but this cuts little ice with Gywn Jones of the NFU of England and Wales.

He said: "The retailers are fervently denying that their actions will be felt by farmers in any way, but I am not convinced. Not only does this create a difficult climate for negotiating autumn milk price increases, but puts real pressure on farmers who fear that the supermarkets will be looking for cuts in the longer-term

"This time, however, the industry will be ready. We will not lie in wait for the inevitable margin slashing that we still bear the scars of. We have been calling for better contracts in the dairy industry, which offer greater clarity, transparency and stability for dairy farmers."