U.K. grocers Morrisons, Aldi give ground in milk dispute

Discount retailers’ success in Britain has led established grocery firms to cut prices for certain basic produce. (Aldi.co.uk)

London | Reuters — British supermarkets Morrisons and Aldi responded on Friday to pressure from financially strapped dairy farmers by raising the price they pay milk suppliers.

U.K. farmers have warned they face financial ruin, with falls in the price of milk forcing many out of work and spurring others to blockade distribution centres and walk cows through supermarkets.

The dairy industry has seen a 25 per cent year-on-year drop in the amount farmers are paid for milk, caused by a decline in demand from China and Russia and exacerbated by a grocery price war in Britain.

The National Farmers Union (NFU) has said retailers Tesco , Marks + Spencer, Waitrose, Sainsbury’s and the Co-operative paid farmers a price based on the cost of production, but others — including Morrisons, Asda, Aldi and Lidl — did not.

Following talks with farmers unions, Morrisons said it had increased its offer to processors of the liquid milk element of its processed fresh milk to a minimum price of 26 pence a litre from later this month and through the winter.

Discounter Aldi said from Aug. 17 it would pay its three processors a minimum of 28 pence per litre for all liquid milk sold in its UK stores.

On Thursday Asda, the British arm of U.S. retailer Wal-Mart, committed to pay processor Arla 28 pence per litre for 100 per cent of its liquid milk volume from Aug. 17 for the foreseeable future.

Morrisons announced earlier in the week that it would create a new brand of milk, “Morrisons Milk for Farmers,” where 10 pence per litre goes back to Arla farmers, giving customers the opportunity to support farmers.

On Friday it announced a similar initiative for cheese. It said it will launch a “Milk for Farmers” cheddar cheese priced at a retail premium of 34 pence-a-pack above the standard Morrisons cheddar price, delivering the equivalent of 10 pence-a-litre back to farmers who supply the milk.

Reporting for Reuters by James Davey in London.

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