TESCO has cut the price it pays its direct suppliers by 1.08ppl from May 1 to 30.93ppl.
Set up in 2007, the Tesco Sustainable Dairy Group (TSDG) comprises about 600 farmers.
The new price has been set using Promar and is set for six months.
Tom Hind, Tesco’s director of agriculture, said: "The TSDG remains a cornerstone of our plans to build ever stronger relationships with our producers. Over the past eight years we have worked in partnership with our dairy farmers to provide the best quality milk possible for our customers, whilst still paying a fair price for the milk we buy.
"Through TSDG and our pioneering Dairy Centre of Excellence with Liverpool University, Tesco has invested £200 million into British dairy farming. By agreeing a clear price for a period of six months, we are able to offer our farmers valuable security in a volatile market."
James Stephen, Aberdeenshire TSDG dairy farmer and committee chairman, said: "The pricing structure of the TSDG goes some way to providing stability and peace of mind, which is often lacking in an increasingly volatile industry. Set for six months, all farmers in the group have real certainty over the milk price they’ll receive, which is of huge benefit when budgeting and planning for the future."