Tesco is to increase the amount it pays dairy farmers for their milk after feed costs and extreme weather sparked a rise in production costs.

Tesco will pay farmers in its Tesco Sustainable Dairy Group (TSDG) 1.19 pence per litre (ppl) more from 1 April, taking their price to 32.77ppl.

It is also offering its TSDG farmers a £40 bonus for every Aberdeen Angus calf produced from their dairy herd. The meat from the animals will be aged for 28 days and be sold in its Finest range. It follows Tesco’s commitment, made in November last year, to source Aberdeen Angus beef for all of its Finest beef range.

The price increase and the investment in calves “demonstrates our commitment to British agriculture, but also means we can offer our customers some of the best produce British farmers have to offer”, said John Scouler, Tesco commercial director. 

The news will be a welcome boost to farmers after weather last year caused feed prices to go up and also led to lower volumes of UK milk production.

“The Tesco Fair Price Guarantee continues to pay TSDG farmers a milk price that secures confidence and the ability to plan and invest in their business for the future,” said Andy Bloor, dairy farmer and TSDG Farmer Committee chairman.

Tesco sources all of its own-label fresh milk, apart from organic, from the 700-strong TSDG.