Britain's organic farmers fear milk price cut

- Last updated on GMT

Related tags: Asda, Milk, Tesco

British organic dairy farmers believe they are being driven out of
business by supermarket cutting the price of milk.

British organic dairy farmers believe they are being driven out of business by supermarket cutting the price of milk, reports BBC Online.

A new code of conduct between farmers and supermarkets was issued this week to claim reasonable terms for farmers but it does not cover milk, meat or bread processing. Meanwhile Tesco is cutting the cost of organic milk by as much as 2.5p a litre.

Tesco claims that it has not dropped the price it pays to farmers and that its price cut will encourage sales and reduce the surplus of milk on the market.

However farmers are concerned about the prospects of another supermarket price war, with the leading stores demanding suppliers to deliver milk at a lower price.

The BBC report notes that the new code of conduct is designed resolve such disputes, but critics of the code point to a fundamental weakness as it does not include the food processors, a crucial part of the chain.

The leading supermarkets,Tesco, Asda, Sainsbury and Safeway have all agreed to comply with the code, drawn up by the Director General of Fair Trading.

With the new code, the supermarkets will have to give advance notice of changes or compensate their suppliers. Complaints about possible breaches can be taken to an independent mediator. The cost of mediation in each case will be borne by the supermarket concerned.

The launch of the code comes after a report highlighted the difficult future for organic farming in Wales, threatened by supermarkets who are importing cheap overseas produce.

There have been constant questions over the ability of organic farming to meet the demands of the current food market.

Related topics: Suppliers

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