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Last Updated: Tuesday, 3 April 2007, 10:11 GMT 11:11 UK
Tesco to pay dairy farmers more
Milk protester outside Downing Street
Farmers have recently protested about milk prices
Tesco has unveiled two new measures to help increase the price UK dairy farmers receive for their milk.

In the first instance, Tesco said it would offer direct contracts to about 850 farmers, paying them 22p per litre, well above the current market average.

While this milk will not be any more expensive for consumers, Tesco is also launching a new "localchoice" milk.

Sourced from farms near the stores where sold, it will cost more, but offer higher returns for smaller farms.

'Encouraging development'

Tesco's two new measures have been welcomed by the National Farmers' Union (NFU).

Milk prices, who gets what

NFU president Pete Kendall described it as "the most significant and encouraging development in the dairy industry for a very long time".

Tesco's move comes after dairy farmers recently held a number of protests against the entire supermarket sector, saying the companies were not paying them a fair or sustainable price for their milk.

"We know that some British milk producers - often through no fault of their own - have had a very difficult time for a number of years," said Tesco's commercial and trading director Richard Brasher.

"We can all debate the causes - the abolition of guaranteed pricing, CAP reform and structural factors in the market - but the fact remains that the industry has found it very tough for a long time now.

"I believe that this new package of measures offers British farmers a great opportunity to work with us, get closer to consumers and grow their business."

Tesco's milk announcement came a day after it denied it had a stranglehold on the UK supermarket sector.

Its comments came as the Competition Commission continues to probe whether the big supermarkets are abusing their market domination by limiting customer choice.

Tesco is the UK's largest supermarket, followed by Asda and Sainsbury's.

What farmers think of the new measures

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