Sir; I give a guarded welcome to plans by Tesco to offer dedicated milk supply contracts to about 850 producers with a base price of 22p per litre. At long last Britain's biggest supermarket chain has recognised that the dairy industry, at farmgate level, has been going through a really tough time in recent years.

In Wales, only 12 to 15 farmers will get this 22p. I congratulate them. But I have said all along that the supermarkets have been making vast amounts of profit on milk and this proves it.

Farmer-owned co-op Dairy Farmers of Britain is also part of Tesco's proposed milk supply partnership. DFB believes its 150 members supplying 'localchoice' milk to Tesco will receive a premium to help them build a profitable and sustainable future.

We hope the benefits from this deal will be quickly extended to farmers throughout Wales. If the supermarkets want to help farmers, they must support British cheeses as well - up to 80% of Welsh milk goes into cheese.

Tesco price hike p48