Tesco agrees to pay milk farmers more money
In a surprise move it has been revealed that Tesco will increase the amount of money paid to farmers in the UK regarding the supply of milk by 1.28 pence to 28.18 pence per litre. However, the new rate, which is well above the market average of 25.77 pence per litre, will only be available to companies who are part of a Tesco Sustainable Dairy Group. So what will this mean for UK consumers?
Consumers are unlikely to see any material impact upon the price of a litre of milk in supermarkets across the UK, at least in the short to medium term. It is no coincidence that the price which supermarkets around the UK have been paying farmers for the delivery of milk has often been at the centre of alleged price fixing allegations. Quite how supermarkets such as Asda, Morrisons and Sainsbury's will react to the move by Tesco remains to be seen but milk is often seen as a loss leader to attract consumers to various parts of supermarket stores.
Many experts believe that the supermarket sector will be more competitive than ever over the next 12 months due to a lack of price inflation on food items and wider concerns about the UK economy.
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