2p or not 2p?

Farmers have been waiting for their extra money

Last month the big supermarkets announced that they were to increase the price of milk on their shelves.

The idea was that the extra two pence per litre, the equivalent of a penny per pint, would go directly back to the farmers.

Tesco originally made the announcement on 4th September and Asda, Sainsbury's, Somerfield and Kwik Save followed suit.

UK dairy industry:

2.2m cows

24bn pints of milk produced per year

50% bottled; 25% cheese; 25% other milk products

But Barbara Price, a Pembrokeshire farmer that Working Lunch visited in September, has been in touch to say there's no sign of her two pence levy.

Barbara and her husband Elvet are struggling to cover costs. At times this year they have received less than 13 pence per litre - the same as they did in 1986. They estimate that they need 20 pence to break even.

Indirect

The delay stems from who buys the milk from farmers.

Some farmers sell their milk directly to liquid milk suppliers or processors - so they're in line to receive their payments.

But others, like Barbara, deal with co-operatives who sell their milk to anyone who'll pay the right price.

This means some of their milk goes to food producers who aren't paying the extra two pence. They will use the milk to make butter, cheese, cream or yoghurt.

Only fifty percent of milk goes to drinking milk.

Retailers

In addition, not all drinking milk gets to the consumer via companies who've agreed to pay the levy:

John: another sector to conquer

"We have to recognise that probably only sixty percent of UK milk finds its way to the consumer via the multiple retailers," says John Duncan from First Milk, the co-operative that Barbara deals with.

"There is another sector of the retail market - the 'cost cutters'. We've as yet been unable to recover any price increase from them."

November

The deal First Milk have struck with the big supermarkets started on 1st October.

This means Barbara and Elvet Price should receive their first increased payment in mid November.

Because not all their milk is sold for drinking and not all goes to retailers who've agreed to pass on extra money, they've been told to expect between a penny and a penny and a half per litre.

This is obviously not as much as they'd like, but it's a start on the road to better prices.