Credit: Hassan Jawad/Geograph

Asda cowtows to dairy farmer demands

The supermarket has agreed to pay milk suppliers 28p per litre.

by Jack Torrance
Last Updated: 18 Feb 2016

It seems the sight of two cows being led around a supermarket in Stafford proved too much for bosses at Asda. Last night the supermarket caved in to demands from dairy farmers to pay more for its milk. From Monday the Wal-Mart subsidiary will pay 28p per litre (compared to an average farm gate price of 23.66p) to its supplier Arla, ‘which will then be expected to pass this onto its British farmer suppliers.’

Farmers have spent the last two weeks taking action against grocers, who have been slashing their prices in the face of fierce competition. Protestors initially launched the ‘Milk Trolley Challenge’, where they would empty a shop’s milk aisles into trolleys and then abandon them at checkouts.

This escalated into blockades of a distribution centre and several farmers taking their animals for a walk around supermarkets. The episode hasn't been great for the supemarkets' reputations, especially when they already have such a controversial record on supplier relations.

Farmers say it costs them 30-32p to produce a litre of milk so 28p might still seem a bit too tight, but the move was welcomed by the National Farmers Union, whose president Meurig Raymond said he was ‘pleased that Asda has moved to support farmers in their hour of need.’

‘This decision recognises that our dairy farmers need a fair price so consumers can ensure they have access to British dairy products now and in the future,’ he added.

Asda will not be passing on any of the extra costs to consumers – an unsurprising move given the ferociousness of the ongoing price war. That strategy does contrast, though, with the response of rival Morrisons, which launched a new range of milk that costs 10p more per litre.

Of course that change will only benefit farmers if customers choose to buy the more expensive milk, which most of them may not do. It has understandably been written off as a ‘token gesture’ by critics. But it’s important to be seen to be doing something if you don’t want to see herds of cattle marched around your shops.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

A leadership thought: Treat your colleagues like customers

One minute briefing: Create a platform where others can see their success, says AVEVA CEO...

The ignominious death of Gordon Gekko

Profit at all costs is a defunct philosophy, and purpose a corporate superpower, argues this...

Gender bias is kept alive by those who think it is dead

Research: Greater representation of women does not automatically lead to equal treatment.

What I learned leading a Syrian bank through a civil war

Louai Al Roumani was CFO of Syria's largest private retail bank when the conflict broke...

Martin Sorrell: “There’s something about the unfairness of it that drives me”

EXCLUSIVE: The agency juggernaut on bouncing back, what he would do with WPP and why...

The 10 values that will matter most after COVID-19

According to a survey of Management Today readers.