Farmers fear milk price wars
Major supermarkets have announced a new round of price cuts in an attempt to lure struggling consumers away from budget stores, such as Aldi and Lidl.
Asda and Tesco promised lower prices over the weekend to try to outflank their rivals.
Asda unveiled a range of goods for sale at 50p – including two pints of milk. The retailer said customers would be able to buy milk at its cheapest price since 2001 following increases of about 21% in the last year.
Other 50p products include bread and butter, eggs, meat and vegetables. The price cuts were only in effect on Saturday and Sunday.
However, the move still sparked widespread fears in the farming community that they would be the ones to suffer from the latest round of the supermarket price wars.
Cheltenham dairy farmer and National Farmers' Union representative for Gloucestershire Jan Rowe said: "I think dairy farmers will be very worried by what's happening.
"What we know from past history with the supermarkets is they tend to eventually recover their margins by taking it out on the milk suppliers.
"Usually it ends up with the farmers having to pay for it. We are in a situation where our costs are rising so rapidly we can't take any further price reduction in milk."
Campaigning farmers are already preparing for a day of demonstrations against Tesco to protest at the retailer's decision to cut the price of milk and they said they were monitoring Asda's 50p milk deal closely. Farmers For Action said it is winning huge support for a show of disapproval of Tesco's decision to start selling a two-litre branded pack for just £1.06.
FFA chairman David Handley said: "We are talking about what action to take and will be staging something in the next couple of weeks. But we have already had farmers offering to fly over from Ireland to join us. That is the measure of the jitters that Tesco has sent through the dairy sector."
The National Farmers' Union said the UK dairy industry was "in crisis".
Hayley Campbell-Gibons, the NFU's chief dairy adviser, said: "We are already seeing the impact of a retail price war. The main concern is the devaluing of milk when we should be getting more money from the retailers.
"These moves undermine the good work the industry has done to tell consumers that the era of cheap food is over, and that the price of milk has to reflect the cost of production."
Tesco said the move meant it had cut £620 million from prices since January. Commercial director Richard Brasher said: "Rising costs continue to hit customers hard and they are looking to Tesco to help."
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