Asda's rivals look poised to ride out any storm caused by its push to highlight differences in milk buying strategies.
On Thursday, Asda launched a TV advertising campaign explaining its direct souring arrangement with a dedicated pool of 550 farmers.
The execution was backed up by newspaper adverts announcing in-store price cuts across its fresh milk, but insisting they had not been made at the expense of farmers. In fact, Asda farmers will get an extra 0.5ppl.
The price of four pints of milk was slashed by 16p to £1.00, the two pint price was cut from 64p to 53p, with the price of a pint falling by a penny to 32p. Asda's rivals immediately followed suit, with Tesco and Sainsbury quickly cutting their prices. However, they did so without a similar promise to increase prices to farmers.
Asda has also written a "four-pint pledge" calling for supermarkets to set up dedicated supply arrangements, publish how much they pay for milk, invest their own margin when lowering prices and back the NFU's A Vision for the Dairy Industry strategy document.
But a Tesco spokeswoman said: "We sell more British milk than anyone. The volume we sell is almost twice that of Asda.
"To set up dedicated farmers with segregated collection, processing and packing would drive inefficiencies in the chain and create additional costs."
NFU chief dairy adviser Tom Hind said that he was pleased Asda was opening up the debate on milk sourcing, but hoped the price cutting did not impact on farmers who supplied other retailers.
He added: "There are two ways to look at this. Either it's an absolute disaster, or you see it as an opportunity to change the way the industry works."
Richard Clarke

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