Tesco has announced an investment of £6 million over the next two years to help support British agriculture.
The new Tesco Cheese Group (TCG) will guarantee British dairy farmers an above market price for the milk they produce for the product, delivering a fair and consistent pricing model for UK farmers.
The new mechanism will provide clear, equitable and transparent pricing which will be regularly set throughout the year.
Pricing will reflect the market and will also award farmers a 2ppl bonus in recognition that they must adhere to the Red Tractor assurance scheme, as well as additional Tesco welfare standards, to improve cow health and welfare.
The new cheese group is building on the success of the Tesco Sustainable Dairy Group (TSDG) which was established in 2007.
The TCG is producing a variety of Red Leicester and Glocester cheese, helping to provide UK dairy farmers with the security to plan ahead for the future.
Commercial director for fresh food, Matt Simister said the new cheese group was created to help meet customers needs whilse ’establishing a long term sustainable livelihood for our farmers’.
He said: "By providing them with the assurance of our commitment, we are hoping to give our producers the confidence to invest so that they can deliver what customers are looking for in an efficient way.
"It is our hope that up to 200 more dairy farms across Britain who produce milk for our British cheese, in addition to the 600 producing milk through the TSDG, can work with us in partnership to create a successful and sustainable future for their production.
"For almost a decade we have worked with dairy farmers to offer the best possible quality milk , produced to the highest standards for our customers, whilst ensuring farmers receive a fair price for their milk.
"We are confident that this new initiative will enable producers, for our own-label cheese, to also plan and budget for the future; and focus on the things that matter most- meeting high animal welfare and food quality standards for customers."
The new cheese group is the latest addition to the retailer’s programme of initiative to support British farmers.
Chief executive of First Milk, Mike Gallacher said: "This new agreement we have concluded with Tesco is about establishing a long term, progressive and sustainable supply chain partnership over the coming years.
"While the current context is hugely challenging in dairy, we need to continue to keep focused on the long term ensuring that we put in place business models that can deliver for our customers, consumers and producers."
Lidl has announced it will now be sourcing 100 per cent British butter using British milk.
NFU food chain adviser Christine McDowell said: “We are pleased that Lidl have recognised the quality of British milk and have now moved all of their butter to be made with 100 per cent British milk.
"At a time of great difficulty for the dairy sector, even such small changes are extremely welcomed.
“Consumers have made it clear that they want to see a dairy sector that is sustainable in the long-term and all retailers can help to deliver this.
“We’ll continue discussions with Lidl, and other retailers, to ensure that British farmers are treated fairly.”