British supermarket giant Sainsbury’s has announced a new £6 million annual investment in its dairy farmers, fostering long term support for the industry.
From next month, dairy farmers supplying Sainsbury’s with milk will be paid more as a result of the annual investment.
According to the supermarket, reports have shown that factors such as rising costs resulted in around 5% of dairy farmers leaving the industry last year, with one in ten believing that they will have left the sector by 2025.
Acknowledging the increasing volatility of input costs and high level of capital investment required by dairy farmers, Sainsbury’s undertook a year-long review, with the support of its ‘Dairy Development Group’ (SDDG) farmer steering group, into how it pays farmers for milk.
Coming into effect from 1 October, the latest investment adds to an £8.9 million booster payment given to SDDG farmers in April last year. Since introducing the ‘Cost of Production’ model to the SDDG in 2012, Sainsbury’s says it has paid farmers, on average, 2.45 pence per litre more, compared to the rest of the market, delivering a £114 million benefit.
£4.3 million of the new investment will go towards giving farmers an additional fixed 1 pence per litre for milk on top of the independently calculated ‘Cost of Production’ price that the retailer currently pays to farmers. With the typical volume of milk produced per year, per farm being roughly 2.7 million litres, this means the average farm could receive around £27,000 extra annually.
The remaining £1.7 million will be used for sustainability bonuses. Sainsbury’s says that farmers will be rewarded for helping the supermarket to achieve its ‘Plan for Better’ targets, specifically carbon reduction, through activities such as using sustainably sourced feed and using the correct amount of fertiliser, in the right way.
Gavin Hodgson, director of Agriculture, Aquaculture and Horticulture at Sainsbury’s, said: “The dairy farming industry is becoming increasingly challenging and we recognise the responsibility we have as a retailer to support farmers and the need for continuous investment in this sector”.
He continued: “We are proud of our continued investment into the Sainsbury’s Dairy Development Group and are confident our £6 million annual investment will help farmers to plan for a long-term and sustainable future. In turn, we hope this will also provide surety of supply for our customers as we continue to champion British milk now and for the future.”
New compliance legislation for dairy farmers means that many will need to make updates to their farms such as upgrading and improving feed stores and increasing the size of slurry storage, all which can be expensive. Sainsbury’s hopes the additional support will give farmers the confidence and desire to invest in these long-term changes so they can continue production for years to come.
You may also like to read:
© FoodBev Media Ltd 2024