Dairy farmers supplying Sainsbury’s UK with milk will be paid more from next month thanks to a £6 million annual investment made by the retailer to support farms for the future.
Recent reports have shown that due to rising costs, almost five percent of dairy farmers left the industry last year, and one in 10 believe they will have left the sector by 2025. Acknowledging the increasing volatility of input costs and the high level of capital investment required by dairy farmers, Sainsbury’s undertook a year-long review into how it pays farmers for milk with the support of its Dairy Development Group (SDDG) farmer steering group.
Over the last year, Sainsbury’s has paid over £66 million in support to British farmers, including increased pay for milk. Starting from October, this latest investment in dairy pay is on top of 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 has paid farmers, on average, 2.45p per litre more than the rest of the market, delivering a £114 million benefit.
A total of £4.3 million of this new investment is allocated to give farmers an additional fixed 1p per litre for milk on top of the independently calculated Cost of Production price the retailer currently pays farmers. The typical volume of milk produced per year per farm is roughly 2.7 millilitres, so that the average farm could receive around £27,000 extra annually.
Alongside the new price model investment, the retailer has also committed £1.7m for sustainability bonuses. Farmers will be rewarded for helping Sainsbury’s achieve its Plan for Better targets, specifically carbon reduction, through activities such as using sustainably sourced feed and using the correct amount of fertiliser. The retailer previously committed a sum of £2.6 million in bonuses for dairy farmers but is expanding the investment as it shifts the focus towards sustainability.
With new compliance legislation coming down the line for dairy farmers, it’s expected many will need to make expensive updates to their farms, such as upgrading and improving feed stores and increasing the size of slurry storage. This additional support from Sainsbury’s aims to give farmers the confidence and desire to invest in these long-term changes to continue production for years.
Gavin Hodgson, Director of Agriculture, Aquaculture and Horticulture at Sainsbury’s, said the dairy farming industry was becoming increasingly challenging.
“We recognise the responsibility as a retailer to support farmers and the need for continuous investment in this sector,” said Hodgson.
Sainsbury’s are proud of their continued investment in the Sainsbury’s Dairy Development Group. They are confident their £6 million annual investment will help farmers plan for a long-term and sustainable future. In turn, the retailer hopes this will also provide surety of supply for its customers as it continues to champion British milk now and in the future.