Sainsbury's has increased the price it pays for British milk in an attempt to reward farmers with high environmental standards and meet a series of sustainable sourcing targets.
Yet as you see here this bonus only just puts the price over cost of production. So on simple maths, a 200 cow dairy farm might receive £6k over production costs on half a million in sales - If I was a dairy farmer, 'thanks !''
The supermarket chain yesterday raised the price it pays for litres of milk by 0.9 per cent in the first pricing review since it adopted a new cost of producion (COP) model in April.
As of yesterday, Sainsbury's increased the price of milk it pays from 30.30ppl to 30.56ppl. A spokesman for the company hinted it was unlikely to pass on the price to customers, as the price it pays farmers has no bearing on the shop price.
Under the COP model, Sainsbury's reviews the cost of resources that went into making the milk each quarter, including fuel, feed and fertiliser. It also includes a welfare and environment bonus payment to reward farmers who have adopted outstanding animal welfare and environmental standards.
Mansel Raymond, National Farmers' Union dairy board chairman welcomed the news as a major boost for the industry.
"Farm gate costs of production are currently over 30ppl, and rising,"
"Dairy farmers need a sustainable future; further price cuts will jeopardise this and be met with real anger."
The new pricing model is also designed to help Sainsbury's meet a target to source all key raw materials and commodities sustainably to an independent standard by 2020.
The plan also includes doubling its British-sourced products, leading on animal welfare and putting all waste to positive use