Sainsbury’s Boosts Dairy Farmers with £6 Million Annual Investment
In a significant move to bolster the UK dairy industry, retail giant Sainsbury’s has committed to an annual investment of £6 million in its network of dairy farmers. This substantial financial injection underscores the company’s unwavering dedication to the sector’s sustained growth.
Starting next month, dairy farmers who supply milk to Sainsbury’s will witness an uptick in their earnings, thanks to this new annual investment.
Recent reports have highlighted the challenges faced by dairy farmers, including escalating operational costs, which led to a concerning 5% exit rate from the industry last year. Alarmingly, one in ten farmers anticipate leaving the sector by 2025.
Acknowledging these pressing concerns, Sainsbury’s embarked on a year-long review, in collaboration with their ‘Dairy Development Group’ (SDDG) farmer steering committee. The objective was to devise a fairer compensation model for milk producers, considering the mounting volatility of input costs and the substantial capital outlays demanded of dairy farmers.
Effective from 1st October, this latest investment builds upon the impressive £8.9 million booster payment extended to SDDG farmers in April of the preceding year. Since the integration of the ‘Cost of Production’ model into the SDDG framework in 2012, Sainsbury’s reports that their payments to farmers have exceeded the market average by an average of 2.45 pence per litre, culminating in a cumulative benefit of £114 million.
Out of the new investment, £4.3 million is earmarked to provide farmers with an additional fixed rate of 1 pence per litre for milk, supplementing the retailer’s existing ‘Cost of Production’ price. Given the typical annual milk production volume of around 2.7 million litres per farm, this translates to an estimated additional income of £27,000 for an average-sized farm.
The remaining £1.7 million will be allocated towards sustainability bonuses. Sainsbury’s has outlined plans to reward farmers for contributing to the supermarket’s ‘Plan for Better’ objectives, particularly in the realm of carbon reduction. This encompasses activities like adopting sustainably sourced feed and judicious fertilizer application.
Gavin Hodgson, the Director of Agriculture, Aquaculture, and Horticulture at Sainsbury’s, voiced the company’s commitment, stating, “The dairy farming industry is becoming increasingly challenging, and we recognize the responsibility we have as a retailer to support farmers and the need for continuous investment in this sector.”
Hodgson went on to affirm,
“We are proud of our continued investment into the Sainsbury’s Dairy Development Group and are confident our £6 million annual investment will help farmers to plan for a long-term and sustainable future. In turn, we hope this will also provide surety of supply for our customers as we continue to champion British milk now and for the future.”
In light of new compliance legislation affecting dairy farmers, many will be required to make substantial upgrades to their farms, including improving feed stores and expanding slurry storage facilities, all of which can be financially burdensome. Sainsbury’s envisions that this added support will empower farmers to undertake these essential long-term investments, ensuring continued production for years to come.
In conclusion, Sainsbury’s groundbreaking £6 million annual investment in its dairy farmers is poised to invigorate the UK dairy industry. This initiative not only promises immediate financial relief for struggling farmers but also sets the stage for a more sustainable and prosperous future for the sector as a whole. With these strategic measures, Sainsbury’s reaffirms its steadfast commitment to supporting British dairy and securing a robust supply chain for its valued customers.
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