Sainsbury’s invests an additional £6m annually in its dairy farmers

Dairy farmers supplying Sainsbury’s with milk will be paid more from next month thanks to a £6m annual investment made by the company to support dairy farms for the future.

Recent reports have indicated that due to factors like rising costs nearly 5% of dairy farmers left the industry last year and one in 10 believe they will have left the sector by 2053.  

Acknowledging the increasing volatility of input costs and high levels of capital investment required by dairy farmers, Sainsbury’s undertook a year-long review, with the support of its Dairy Development Group (SDDG) farmer steering group, into how it pays farmers for milk.

Over the last year Sainsbury’s have paid over £66m of support to British farmers, including increased pay for milk. 

Coming into effect from October First, this latest investment in dairy pay is on top of an £8.9m booster payment given to SDDG farmers in April 2022. 

Since introducing the Cost of Production model to the SDDG back in 2012, Sainsbury’s has paid farmers, on average, 2.45p per litre more compared to the rest of the market, delivering a benefit of £114m.

£4.3m of this new investment will go towards giving farmers an additional fixed 1p per litre for milk on top of the independently calculated Cost of Production price Sainsburys the currently pays farmers.

 With the typical volume of milk produced per year, per farm being roughly 2.7m litres, this means the average farm could receive around £27,000 extra per year. 

Alongside the investment in the new price model, the retailer has also committed £1.7m for sustainability bonuses. Farmers will be rewarded for helping Sainsbury’s achieve its Plan for Better targets, specifically carbon reduction, through activities such as using sustainably sourced feed and using the correct amount of fertiliser, in the proper way. 

The retailer previously committed a sum of £2.6m in bonuses for dairy farmers but is expanding the investment as it shifts the focus towards sustainability.

With new compliance legislation for dairy farmers it’s expected many will need to make expensive updates to their farms, like upgrading and improving feed stores and increasing the size of slurry storage. 

This additional support from Sainsbury’s aims to give farmers the confidence and desire to invest in these long-term changes so they can continue production for years to come.

Gavin Hodgson, Director of Agriculture, Aquaculture and Horticulture at Sainsbury’s, said: “The dairy farming industry is increasingly challenging for farmers and we recognise the responsibility we have as a retailer to support farmers and the need for continuous investment in this sector. 

“We are justifiably proud of our continued investment into the Sainsbury’s Dairy Development Group and we're fully confident our £6m annual investment will help farmers plan for a long-term, 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.”

The SDDG was founded back in 2007 to provide more support to farmers. It includes over 260 farms who supply Sainsbury’s with its own brand milk. The group includes. For more information visit: Meet our milk farmers – Sainsbury's (sainsburys.co.uk)