Are discount chains bad news for farm businesses?

ANY MOVE upwards in the farmgate milk price – no matter how small – has to be welcomed these days and the price increases announced this week by the co-op Milk Link certainly fall in to that category.
And it’s not just the liquid market that is driving this price rise, with the co-op’s manufacturing price only marginally behind the 25p per litre plus that the liquid market suppliers can expect.
This move has, not unexpectedly, been welcomed by NFU Scotland on behalf of Milk Link’s 85 Scottish suppliers.
The union uses this as an opportunity to remind the PLCs that they too should be passing a greater proportion of their earnings back to the primary producer – and quite rightly so. It is also to be hoped that the Scottish-based co-op, First Milk, manages to match the Milk Link price sooner rather than later. Only then will producers feel that the recent ‘reforms’ have been worthwhile.
One worrying trend, however, that the whole industry can be united upon, is the growing difference in retail prices between the major supermarkets and the low cost ‘discounter’ chains, which are now selling milk at 17p a litre (26.3%) cheaper than the big multiples. This can only have a negative effect on the liquid market and must be an industry focus for the immediate future.