Tesco has announced that the price of a four pint bottle of milk will be cut by almost 30 percent.

The cut, taking the price of a 4 pint milk bottle from £1.39 to £1 from Monday (3^rd March), follows similar cuts on fresh produce announced by the retailer late last month (these include onions, tomatoes, cucumbers and carrots). Spokespeople for the supermarket said the cuts are part of an effort to provide better value for its customers, but farm industry commentators have warned that the move could spark a price war, with other retailers following suit.

Tesco, the UK's largest supermarket chain, moved to assure that "The new lower price for milk has no impact on the price Tesco pays to the milk farmers in its… Sustainable Dairy Group (TSDG)," though critics are concerned that, if a price war ensues, suppliers of other retailers may not benefit from such guarantees.

Although Tesco's move takes it out of line with competitors Sainsbury's and Morrisons on milk pricing, Asda has sold milk at the lower price for a number of months.

Around 650 farmers supply milk to Tesco, and the price Tesco pays for their milk is set independently twice a year, using a model that factors in milk's value on the international market, as well as fluctuations in production costs. The Tesco model promises that it will always pay above the cost of production, to enable farmers to strengthen their businesses.

John Scouler, Tesco Commercial Director, added by way of assurance, "We care about our milk and where it comes from, which is why we set up the TSDG.  We promise that our farmers will always be paid a fair and independently agreed price for their milk, so they can invest in the future of their farms and provide higher welfare standards for their cows.  When our customers buy their milk at Tesco, they can be confident that it's responsibly sourced and at a fair price for all."

Commenting on the situation, an unnamed NFU spokesperson told the Telegraph that the price cuts stand in contrast to 18 months' worth of positive movement in milk prices for farmers, which in some quarters remain below the cost of production. The spokesperson said "This is not good news for the industry."

On Monday, NFU chief dairy adviser Rob Newbery said, "The NFU recognises Tesco's commitment to sustainable farmgate milk prices, with the TSDG, however this decision is still regrettable and risks devaluing what should be a premium consumer product. Farmers do not set retail prices but we will be monitoring the situation to ensure this short-term marketing effort does not have an impact on farmgate milk prices now and further down the line."

**Update 03/0302014 - Further comment from NFU spokesperson Rob Newberry added**