Following a majority vote in April, the model is designed to reward Sainsbury's Dairy Development Group (SDDG) farmers for outstanding animal welfare and environmental standards. With the price currently sitting at 30.30ppl, one of the unique elements of the COP is the quarterly review of feed, fuel and fertiliser. This will ensure that the most volatile elements of costs will be reviewed every quarter and the COP milk price changes to reflect these varying costs, in turn ensuring a fair deal for the 324 farmers involved.
Alice Swift, Agriculture technologist at Sainsbury's said: "While input costs continue to be so volatile for farmers, we're pleased to show that the model is delivering a fair price for everyone whilst most importantly being sustainable for the whole supply chain.
The COP model was developed to be transparent and robust for our farmers however this is also good news for customers who want Sainsbury's to do the right thing on their behalf."
Mansel Raymond, NFU Dairy Board Chairman continues: "Farm gate costs of production are currently over 30ppl, and rising. With this in mind I'd like to congratulate Sainsbury's, whose cost of production model, which reflects feed, fuel and fertiliser inflation, will be awarding a price increase to farmers from 1st July.
"Dairy farmers need a sustainable future; further price cuts will jeopardise this and be met with real anger."
The first quarterly review uses data from Dairy Co Datum which will affect the Sainsbury's milk price from 1st July 2012. The model was developed with independent consultants to suit all Sainsbury's farm types and sizes and ensure their sustainability and profitability in the long term.
Notes to editors