Tesco bore the brunt of a few milk farmers' discontent over prices at the Irish Farmer’s Association (IFA) Liquid Milk Forum held last Friday in Dublin. Tesco was the only retail group in on the panel.
During the discussion stage of the event, a number of farmers raised their concerns that Tesco does not do enough to support local suppliers, despite the retailer's claims to supply only 100% National Dairy Council (NDC) certified milk.
Kern Kinnear, commercial business manager, Tesco Ireland, addressed the farmers concerns and conceded that there had been significant changes in supply contracts from the start of this year. “We still, as a business support, supply 100% of our product through Irish farms," he said. "We’ve had a change in the way that a number of co-ops supply us through that contract. Other than that, I can’t really comment on the commercial negotiations that lead up to that, only to say that we are still supporting and supplying liquid milk from Irish farmers.”
When asked why Tesco continues to sell its own brand milk at the price of €1.49 for two litres, Kinnear maintained that while he was restricted in what he could say under retail authority guidelines, Tesco is not the only retailer selling milk at that price. “We’re also in a very competitive environment and are competing with other retailers also offering their milk at the same price," he said. "Quite frankly, we've got to offer staple goods at a very very competitive price, given the market we're in.”
Finally Kinnear was questioned on whether Tesco can afford to innovate in the milk category considering its recently published market earnings drop. “You simply have to innovate, he said. "Approximately 12 or 13% of all of our sales in our supermarkets [...] comes from innovation. Less so in milk, say, but thats not to say that we can’t add value to the category by innovating.”
One farmer said that until the processors stop soft selling to the supermarkets and ask for a proper price, farmers should “pack it in”. Dr Muiris O’Ceidigh, chief executive, National Milk Agency (NMA) said that one of the things that could be done to amend this situation is to have a representative from a large and small retailer on the NMA.
© 2014 - Checkout Magazine by Genna Patterson