The Royal Association of British Dairy Farmers has welcomed Tesco's announcement offering direct contracts to 850 dairy producers, guaranteeing them a farm-gate milk price of around 22ppl. The new arrangement which it says is a ‘huge step forward', is open to all farmers who already have contracts with Arla and Wiseman and will fulfil 100% of Tesco's annual 930 million litre requirement.

In addition, the association says that the supermarket's offer of direct contracts to 150 smaller family owned dairy farms to supply its newly launched ‘localchoice' brand in return for a 6ppl premium, is equally good news. The offer is available to Dairy Farmers of Britain suppliers with less than 100 cow herds.

“This is a very positive sign in the market place,” comments RABDF chairman, Lyndon Edwards. “We are pleased and relieved that Tesco has recognised the need to ensure a sustainable dairy supply chain which includes the smaller family farms. It is encouraging to see Tesco is offering a milk price that should provide farmers with the scope to cover their basic costs. That is a huge step forward and the break-through we have all been working so hard for.”

He adds: “However, whilst this announcement will have positive connotations for many, both directly and indirectly, it is of paramount importance that the remaining retailers now follow suit in order to ensure the long term viability of the whole dairy industry.”