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Sainsbury's dairy farmers agree new pricing model

Sainsbury's is to introduce a new Cost of Production model for its dairy farmers.


Sainsbury's dairy farmers agree new pricing model

Sainsbury's is to introduce a new Cost of Production model for its dairy farmers.

The supermarket said the model had been developed with independent consultants to suit all of its farm types and sizes, and to ensure their sustainability and profitability in the long term. It will include a quarterly review of feed, fuel and fertiliser which are the most volatile elements of costs. The supermarket’s COP milk price will change to reflect the varying costs, which Sainsbury’s said will help ensure a fair deal for the 324 farmers involved.

From 1 May the COP price will be set at 30.30 ppl for a standard 1 million litre producer including a welfare and environment bonus payment. The bonus is designed to reward farmers for excellence in animal welfare and their commitment to reducing the environmental impact since the Sainsbury's Dairy Development Group was established five years ago.

Justin King, Sainsbury's CEO said: "This is great news for farmers and testimony to the incredibly close relationships we've built over the past five years through our industry-leading Dairy Development Group. We've invested £40 million and seen significant advances in animal welfare and environmental standards, in turn saving our dairy farmers over £10 million.

"We're delighted farmers have voted to adopt our model. It's a real vote of confidence in our approach and will help farmers at a time when costs for producing milk are so volatile.

"This is also good news for customers who want retailers to do the right thing on their behalf. This move is a great example of how our values make us different. It is a natural next step towards our wider commitment to source with integrity, including our pledge to source all key raw materials sustainably by 2020, and to double the amount of British food we sell."

Ben Jack, SDDG Steering Group representative added: "This confirms Sainsbury's huge commitment to its liquid milk suppliers and will enable the SDDG to move forward and promote the terrific work that has already been achieved."

The model will be introduced across farms in Wales, England, Scotland. Sainsbury’s said that any farmers who are against the move to a COP model will have the option of leaving the SDDG provided it is before 1 May. 



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