Sir Terry Leahy and Directors of Tesco Plc
Herts EN8 9SL
10 December 2004
Dear Sir Terry
“Just Milk” Campaign for fair farmgate prices.
FARM initiated the Just Milk campaign in response to research demonstrating that a third of dairy herds have disappeared since 2000 and a further third are forecast to go in the next few years. These loses are of particular concern to the public because these are the farmers who maintain the countryside and support the rural communities; the loss of these farmers will inevitably lead to further environmental degradation and rural deprivation.
The Just Milk campaign has shown that Britain’s dairy farmers have the overwhelming support of the public, with many of the customers we have spoken to expressing their deep concern over the acute crisis facing dairy farmers. Consumers are aware of the wider environmental and social implications of the injustice of poverty milk prices and are demanding decisive action from Tesco.
Research from the Milk Development Council demonstrates that there is profit in the milk chain but that farmers consistently receive a farmgate milk price that is below the cost of production. The farmer is failing to receive a fair share of that profit because of a power imbalance in the milk chain. In the last decade, the average retail price for a litre of milk has risen from 41 to 48 pence whilst the farmgate price has fallen from 24 to 18 pence.
Tesco’s response to the Just Milk campaign and the concerns of Tesco customers has indicated support for dairy farmers but states that the company believes its existing arrangements with the supply chain are sufficient to ensure that their customers growing concerns are unfounded; and, moreover, states that Tesco is powerless to intervene.
FARM does not accept that existing arrangements are satisfactory; does not accept that Tesco is powerless to intervene; does not accept Tesco’s failure to accept its responsibilities to its producers; nor accept Tesco’s failure to take the lead in developing a viable sustainable future for the dairy sector.
If Tesco is to retain the trust of its customers, it must use its dominant position in the retail market to bring about a fair system, giving shoppers a clear assurance that Tesco’s profits are not being made at the expense of farmer’s livelihoods. As a first step, Tesco must:
- Acknowledge the gravity of the current situation facing farmers and the overwhelming public support for a diverse range of farm sizes
- Commit to a process of developing a transparent system of pricing that gives customers the reassurance that the money they spend on food is fairly distributed along the supply chain, giving each player a fair return for the investment and effort they have put in to bringing food to the table.
This is an opportunity for Tesco to demonstrate that it is a market leader as well as a market dominator.
We look forward to your response.