Tesco CoP Pricing Retained November 5, 2015 12:00 am The UK’s largest retailer, Tesco, will continue to purchase much of its milk under a cost-of-production pricing formula. This comes after a review of the Tesco Sustainable Dairy Group (TSDG) was published. There was some speculation that the grocer could back-away from an aligned producer group paying a premium price. At present, Tesco farmers receive 30.5ppl (including a costings supplement). Many other farmers supplying the liquid milk market will be getting a price in the low twenties. Paying such a supplement was questioned at a time when the retailer has reported underlying profits for the first half of the year down 55% (albeit still at £354m). There will be some changes in the way TSDG operates however, the be introduced from the 1st February; the cost review will be undertaken every three months rather than the current six-monthly change submission of costings data to Promar will become an integral part of the contract and no longer be voluntary with no premium being paid a scorecard system will be introduced for dairy farmers. This will focus on animal health and welfare, carbon foot-printing, milk quality and ‘innovation’. Those who come in the top 5% of the scoring will be offered the chance to supply an additional 100,000 litres. Those who do badly on the scorecard would be put on notice and could even lose their contracts. The retailer has previously announced that it would be looking for up to 150 new farmers under the TSDG. These will be recruited via its main suppliers, Arla and Muller. A proportion of the new supply will be reserved for new entrants and young farmers.
