Arla Foods has renewed its arrangement to supply own-label milk and cream to Asda for the next three years, in a deal representing 500m litres of British milk a year.
The announcement comes less than two weeks after Arla lost around half of its milk supply contract with Tesco - reportedly representing around 200m litres of milk a year - to Müller Milk & Ingredients.
Arla said the deal ensured its farmer owners had retained a “sustainable home for their milk”, with executive vice president for the UK Peter Giørtz-Carlsen describing the partnership as “welcome news” for the co-op.
“We value Asda’s continued support for our dairy farmers,” he said. “This demonstrates we need to develop our industry by partnering with our retail customers and adding value, and we look forward to working further with Asda and supporting their commitment to our owners.”
But in light of the loss of Tesco business - which had prompted concern within the farming community that up to 200m litres of surplus milk would flood the already beleaguered dairy sector – an Arla spokesman confirmed Asda’s volumes would not increase and would continue in line with the amount it was supplying previously.
“The continual support that ASDA has shown to Arla farmers across the country and its commitment to dairy should be commended,” said Arla farmer and chairman of the Asda Dairylink farmer group Martin Evans. “Life on farm is extremely tough at the moment and this news is exactly what our farmers need.”
The agreement continued a ten year relationship between Arla and Asda, and “reaffirms our commitment to supporting the British dairy farming industry”, said a spokeswoman for the retailer.
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