Tesco has today announced that it will invest £6 million over two years to help support British agriculture.
The retailer has created the new Tesco Cheese Group (TCG), which Tesco says 'will guarantee dairy farmers an above market price for the milk they produce for Tesco’s own-label produce'.
The Tesco Cheese Group will launch on 17 April and pay farmers a market rate plus a 2p/litre bonus.
Tesco says the move will deliver a 'fair and consistent pricing model' for UK farmers.
Commercial Director for Fresh Food Matt Simister said: "We have created this new cheese group to help us to meet customers’ needs whilst also establishing a long term sustainable livelihood for our farmers.
"By providing them with the assurance of our commitment, we are hoping to give our producers the confidence to invest so that they can deliver what customers are looking for in an efficient way.
"It is our hope that up to 200 more dairy farms across Britain who produce milk for our British cheese, in addition to the 600 producing milk through the TSDG, can work with us in partnership to create a successful and sustainable future for their production.
"For almost a decade we have worked with dairy farmers to offer the best possible quality milk, produced to the highest standards for our customers, whilst ensuring farmers receive a fair price for their milk.
"We are confident that this new initiative will enable producers, for our own-label cheese, to also plan and budget for the future; and focus on the things that matter most- meeting high animal welfare and food quality standards for customers.’
Peter Willes of Parkham Farms commented: "Over the past 15 year’s Parkham Farms has been proud to supply our great tasting cheese to Tesco.
"The new pricing model will ensure that we and our farmers are paid a premium price above that of the market reflecting the quality of our cheese and the milk that goes into it.
"We believe it will provide a long term and sustainable structure to help build our relationship with Tesco even further."
Mike Gallacher, CEO of First Milk said: "This new agreement we have concluded with Tesco is about establishing a long term, progressive and sustainable supply chain partnership over the coming years.
"While the current context is hugely challenging in dairy, we need to continue to keep focused on the long term ensuring that we put in place business models that can deliver for our customers, consumers and producers."
Tesco says the new mechanism will provide 'clear, equitable and transparent pricing' which will be set regularly throughout the year.
The price will reflect the market and will also award farmers a two pence per litre bonus - in recognition that they must adhere to the Red Tractor assurance scheme, as well as additional Tesco welfare standards, to improve cow health and welfare.
