milk

 

Morrisons has riled farmers with an aggressive new milk promotion offering 12 pints for just £2.

The retailer this week launched a 2 for £2 multibuy deal on its own-label six-pinters (normally priced at £1.30 each), bringing the cost per pint down to just 17p.

The 12 pint deal – scheduled to run until 12 June – means Morrisons is selling milk at least 5p per pint cheaper than any of its competitors on the same sized product, with Asda selling six-pinters at £1.30 each, and Sainsbury’s, Tesco and Waitrose selling them at £1.48 each, or 22p and 25p per pint respectively [Brand View].

The deal was criticised by NFU dairy board chairman Michael Oakes, who said selling milk so cheaply at a time when farmers faced swingeing price cuts amounted to “a kick in the teeth”.

“It’s devaluing the product, and we’re beginning to see a tipping point where dairy farmers are saying they can’t carry on any longer,” Oakes said. “Somebody is bound to follow Morrisons, and then we’ll be in another downward spiral on prices.”

However, Morrisons defended the deal, saying many of its customers were “working to a tight budget and every penny counts so it’s important for us to be competitive on everyday essentials such as milk”. The milk price paid to suppliers would not change as a result of the promotion, a spokesman stressed.

He also pointed to the success of the Morrisons Milk for Farmers brand – which launched last October and allows customers to pay a small premium on milk and cheese to ensure farmers get paid a higher price.

Morrisons had recently expanded its range to include four-pint skimmed, two-pint semi-skimmed and two-pint whole milk following customer feedback, and was selling around 950,000 litres under the brand every week, he claimed.

Farmgate price cuts

While Morrisons’ deal will not affect farmgate prices, it comes at a time when farmgate prices are plummeting and anxiety among dairy farmers over pricing practices is high.

Müller Milk & Ingredients last week announced a 0.49ppl cut in its standard milk price from 1 June to 19.11ppl, citing “the continuing impact of depressed markets”. And dairy co-op First Milk slashed its milk price by between 0.66ppl to 0.72ppl on 1 May for similar reasons, meaning it is paying some of its members as little as 16ppl.

It added this week, however, that its turnaround plan was “on track”, and it expected to deliver an operating profit of £4m for the year to 31 March against a loss of £20m last year.

 

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