NFU Scotland on Tesco's dairy contract reductions

That was the warning of NFU Scotland Milk committee chair Bruce Mackie. He said: “The announcement from the Tesco Sustainable Dairy Group (TSDG) that it is to reduce the number of dairy farmers directly supplying the retailer for its own label fresh milk will likely see some Scottish dairy farmers lose that contract even after those who opt to voluntarily retire from production are taken into account.

“Established in 2007, the TSDG was the first supermarket aligned contract and is the largest group of dairy farmers working directly with a retailer in the UK. We will use our network of members to assess how the decision will affect them and how we can assist.

“It is understood that, from late September, those affected will be given 12 months’ notice and that the decision will be served across all volume bands.”

He continued: “Given the current fluctuation and uncertainty around milk prices and contracts, it is imperative that the affected farms are not disadvantaged during the 12 months’ notice period.

"They should be given the chance to move to a Müller direct contract as soon as possible or given the option to terminate the contract and move to another milk processor, should another buyer be available.

“It would be grossly unfair to hold these producers at a lower price given the higher costs involved with adhering to the Tesco code of practice when they know the clock is ticking on their contract.

“We recognise that the decision has been justified on the back of declining liquid milk sales. However, the overall market for dairy products remains very robust and products like yoghurt, cheese, butter, and dairy desserts continue to enjoy strong demand. Yoghurt, in particular, has benefited from consumers recognising the many health benefits, with high-protein and probiotic varieties gaining popularity.

"Butter sales have also seen a resurgence, driven by the move away from margarine and processed spreads.”