Sainsbury’s dairy development group

Fair price for farmers  

Our fair pricing policy helps us show customers how we back British farmers.  
   
When Sainsbury's first started working with a dedicated group of farmers back in 2007, this highlighted the need to pay farmers a price that covered their cost of production, as well as rewarding them for implementing higher standards of animal health and welfare.   
   
Since 2012, Sainsbury's has paid all dedicated dairy farmers a price determined by what it costs them to produce; a cost of production (COP) price. The cost of production pricing model makes sure that the base price we pay for the milk reflects farmers' costs and isn't influenced by us at any level. As feed, fuel and fertiliser costs are the most volatile for a dairy farmer, every three months our pricing model responds to these increases and decreases to protect our farmers.  

Actual financial data collected annually from our dairy farms by an independent dairy consultant feeds into the price changes. This all means that our farmers get a guaranteed price that takes into account their costs and is independent of the retail price of milk.  
On top of the farmers’ cost of production payment calculation, a margin is paid which includes a reward for meeting our high health and welfare standards, which are assessed during audits by independent veterinary experts.  

Farmers in the SDDG are also given a bonus payment for improving sustainability on their farm, for example carbon reduction, through activities such as using sustainably sourced feed and using the correct amount of fertiliser, in the right way. We also encourage farmers to improve biodiversity, mapping their farms on LandApp and testing their soil to ensure it remains healthy and productive.  

As well as the long-standing animal health and welfare and sustainability incentives, we have recently (October 2025) agreed an updated financial model to account for growing cost pressures and upcoming environmental regulation, representing a further £9m investment into the group.  
   
Having the security that Sainsbury's will pay them fairly gives farmers the confidence to invest in the future of their business for future generations.   
   
We are already seeing younger generations start to get involved, and we are supporting them to get ahead by providing group meetings with other farmers supplying Sainsbury's. This helps them to gain knowledge and best practice from others on how to create a successful dairy business that is fit for the future.