Management & Strategy

Tesco puts new price deal to dairy farmers

Shopping trolley - Tesco is seeking a new deal with dairy farmers - SantanderCB

Tesco is seeking a new deal with dairy farmers, having written to its suppliers outlining new terms that include reviewing the price it pays every three months, and implementing a ranking system based on milk quality, animal welfare and environmental standards. The top 5% will receive an extra order of 100,000 litres of milk each year, but the bottom 5% will be given three months to meet Tesco's standards or they will be dropped as suppliers. The supermarket also reiterated its pledge to pay a price for milk based on the cost of production, a move that is expected to be broadly welcomed by farmers. Following a summer of disruption that saw protesters parade cows around a supermarket, Tesco launched a review of its agreement with farmers, called the Tesco Sustainable Dairy Group. New chief executive Dave Lewis is determined to simplify the store's relationship with suppliers. The new terms will be introduced from February 1.


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