Britain’s biggest retailer Tesco will increase the price it pays for all its fresh milk by nearly 20% as suppliers battle unprecedented levels of on-farm inflation.
The group, which has a 27.4% share of Britain’s grocery market, said the 520 British dairy farmers that makeup Tesco’s Sustainable Dairy Group (TSDG) will see the retailer pay them 40.84 pence a litre in May versus 34.16 pence a litre currently.
Costs & Prices on the Rise
The dairy sector has been hit with severe increases in processing costs, including energy, labour, raw materials, maintenance, storage and depreciation. These cost increases came primarily from the sharp increase in energy prices (gas and electricity) seen in Q4 2021, and the cost of drying powders has been particularly affected.
Prices for all key dairy products have been increasing steadily so far this year, both on domestic and global markets and it is expected this will continue until at least late spring/early summer as supplies remain tight. UK wholesale prices have continued to reach 5-year highs.
The Russian National Union of Poultry Farmers has submitted a letter to the Agricultural Ministry asking to suspend the export of feed wheat, corn, soybean meal, feed amino acids, vitamins, package, equipment, and hatching eggs, citing concerns over the industry’s stability amid the continuing war in Ukraine. Feed prices continue to rocket and egg prices have followed. Every week the egg price has increased and is expected to increase further.