Dairy farmers say their profits will be hit hard by Asda's decision
Supermarket group Asda has dropped 200 of the 500 dairy farmers who supply it with milk - cutting their income by thousands of pounds a year.
The supermarket secures all its liquid milk from food company Arla and the farmers supplying Asda specifically get an extra 1p per litre bonus.
Asda said it was cutting its pool of dedicated farmers from 500 to 300 because of oversupply.
Farmers in North Yorkshire said they would lose about £5,000 a year.
Asda told BBC Radio 4's Farming Today programme that it had had to reduce the number of dedicated farmers because it had more milk than it needed.
The changes would provide more opportunities for the remaining farmers, it added.
Letters were sent earlier this month advising those affected that their contracts would be amended from 1 April.
David Brown, a dairy farmer based near Harrogate in North Yorkshire, said: "We got a letter saying Asda have been looking at the dedicated farmer pool and they have reduced it and unfortunately we will no longer be supplying milk to Asda.
"It means I am going to lose somewhere in the region of £5,000 a year.
"It basically means there will be no future investment at this farm - that will be it."
It is understood that a range of criteria were used to choose which farms were removed from the pool, including location and the farmer's "commitment to the partnership", as demonstrated by the attendance record at Asda/Arla farmer meetings.
Mr Brown said: "I was told it was because we didn't go to the meetings which Asda organised for us.
"I said that's not correct because I have gone to as many of these meetings as possible. I missed one because I was on holiday and a few because we had cows calving that morning."
Mark Smith, a dairy farmer in Nidderdale, North Yorkshire, said the news that he was being dropped from the Asda pool was "gut-wrenching".
He produces about 500,000 litres per year from 75 cows so the Asda bonus was worth about £5,000 a year.
The loss of the bonus would take his profits below the cost of production, he said.