Tesco last week announced an increase to milk prices paid to its dedicated Sustainable Diary Group. The rise was announced following the latest review of the dairy sector, which revealed rises in input costs.

From the start of next month, prices will rise 1.19 pence per litre for suppliers in Tesco's SDG. From April onwards, Tesco will pay a farm gate price for all fresh milk, save for organic milk, of 32.77ppl.   

Tesco uses a cost tracker mechanism to assess the profitability and costs associated with milk production every six months, which then influences the price it pays for milk. This period, higher feed costs and lower volumes of milk led to a price rise.

The supermarket claims that, as a result, the 700 dairy farmers in its SDG receive "one of the highest prices paid by any retailer" for their milk.