Whiter than white?

FOODSERVICE BUSINESSES talk a good game when it comes to supporting British dairy farmers, but few are willing to divulge details of the price they are paying for milk.

Foodservice Footprint White-Cow-300x300-300x300 Whiter than white? Features Foodservice News and Information Green Scene Out of Home News Analysis  The Daily Telegraph Starbucks SOS Dairy Red Tractor NFU National Farmers Union Lee Woodger John Dyson Jamie Oliver Hugh Fearnley-Whittingstall FairDeal David Burrows Dairy Industry Code of Practice Costa Compass British Retail Consortium British Hospitality Association 3663














It takes a lot of bottle to stand up to the might of the retailers, but dairy farmers are doing a pretty good job of it. Their SOS Dairy campaign has attracted widespread media coverage, pushed the government to oil the chains of a new voluntary code and forced several supermarkets to pay a more sustainable price for milk.


Price is, inevitably, where the battle started: a wave of price cuts was proposed which would result in farmers being paid less than the cost of production for milk. Bottled water, pint for pint, is being sold for more than milk – a fact that shocked Hugh Fearnley- Whittingstall, among others, to back the campaign and press the retailers into action.


“Dairy farmers can’t take industrial action. Their daily commitment to their herd makes it impossible. How cynical of retailers to take advantage of this. It’s time supermarkets stopped using milk as a loss leader,” he wrote in a letter to the Times.


But this debate isn’t just about the retailers – something the British Retail Consortium has been keen to publicise. Just before thousands of farmers marched into London for July’s “dairy summit”, it suggested that “the pressure should be on other big buyers of milk to show the same strong support for the [dairy] industry that retailers do”. These other buyers included “the catering sector, food manufacturers and the public sector”.


So what is a fair price for milk, and are foodservice businesses paying it? Last month the National Farmers Union (NFU), which is part of the dairy coalition behind the campaign for fairer prices, published a list of statements from milk buyers on their milk policies. The retailers all talk about the specifics of the prices they are paying, yet none of the foodservice businesses do.


Compass, for instance, says: “All of our milk is purchased from UK dairies that source their milk directly from UK farmers. We champion the use of British produce across our sites and we are fully committed to supporting British farmers and paying a fair price for the products we buy.” But when asked about the specifics of this “fair price”, a spokeswoman was unable to answer. “I’m sure you can appreciate we can’t comment on the details of our contracts with suppliers or clients.”


It’s a similar story with the high-street coffee chains. Starbucks states that it is committed to supporting the British dairy industry and is proud that all of its milk is sourced from UK farms and carries the Red Tractor mark. The company also says that it’s paying more for its milk than it was 12 months ago, has discussed the situation with its dairy supplier and is looking at options more widely for how it sources milk. A spokeswoman mentions a 2p per litre rise but there is no context. Costa Coffee, meanwhile, says it has “regular dialogue” with farmers to ensure that the prices paid are fair.


Costa is the UK’s largest coffee shop chain and yet sells less milk than Iceland, a minnow in the retail market with just a 2% share. But that doesn’t mean the NFU isn’t looking more closely at the foodservice sector. “Farmers need to be receiving somewhere in the region of 29p to 30p per litre from the dairy,” says Lee Woodger, the head of the NFU’s food chain unit. “Part of the problem is that caterers might not know what a farmer is actually receiving or they’ll complicate the issue by talking about what they pay for the milk [which includes the processor margin] or what it costs to get milk delivered to their distribution site or even catering outlet.”


Woodger accepts that it’s often more complicated for catering companies to trace back through the supply chain. A coffee chain with hundreds of stores (Costa has 1,390) will be sourcing milk in a number of ways. But low prices are “a situation that keeps recurring and the foodservice industry must play its part” to ensure a fairer deal for farmers, he says.


Are foodservice businesses paying a fair price? Woodger isn’t so sure. “You’ll see that most of the retailers talk about pricing, but not the others – including the caterers. You might like to take a view on what that means in terms of whether farmers are receiving a sustainable return or not. I’d suggest that if they don’t tell us what the figures are the answer is ‘probably not’.”


Even those that have backed the SOS Dairy campaign are not necessarily practising what they preach. The Daily Telegraph discovered that Jamie Oliver, who signed the same letter as his fellow chef Fearnley-Whittingstall, was buying milk for his own restaurants from a processor that was paying farmers below the cost of production.


In the public sector there are also challenges. “Many public-sector contracts are on extremely tight budgets, which puts an even stronger emphasis on the price paid for raw materials,” says John Dyson, a food and technical affairs adviser at the British Hospitality Association. “However, we believe the catering industry’s support for the milk industry is strong and consistent. We will support the Dairy Industry Code of Practice and continue to promote milk and dairy products produced by the UK dairy industry in food services outlets.”


The association, among others, is in talks with the NFU about the possibility of a “Fairtrade-type” scheme for UK farmers. Discussions on how that might work are ongoing, both within the industry and with the Fairtrade Foundation. Woodger says the scheme, with a working title of FairDeal, is some way off; something similar to Fairtrade with a consumer-facing logo is a possibility though. Another option is a simpler scheme in which an independently calculated minimum price is published and promoted as a benchmark.


Whatever the scheme, foodservice businesses are likely to have to open themselves up to more public scrutiny. “The issue of a lack of transparency is partly why I’m so keen to see if a FairDeal scheme is possible to develop,” says Woodger. “Even if this doesn’t lead to a full Fairtrade-type model then at least having some kind of recognised number – and possibly a set of relationship principles – would be a step forward.”


Most businesses were reticent to comment on the concept, given that it is in the early stages. However, a 3663 spokeswoman admits that it would need to be “very carefully thought out”.


She adds: “It would also be important that the industry was fully behind any mark to ensure unanimous uptake and avoid a plethora of similar schemes being adopted to meet slightly varying needs with the potential to confuse customers and consumers.


Critically, any new system must not add any costs into the production process – for example costs to register, monitor progress or to use the logo use.”


Of course, if it works, the scheme would not be restricted to milk.


What’s on the table?


The National Farmers Union says it is a “long way” from knowing exactly what kind of FairDeal scheme is possible. Currently, there are three possible options being discussed with a variety of food companies:


• A full “Fairtrade-type” scheme with consumer-facing logo requiring audit


• A scheme designed to accredit processors/packers and the like


• A much simpler and more basic scheme that independently calculates some form of FairDeal minimum price which is published and promoted as a benchmark