A major supermarket has agreed to raise prices for its dairy farmers.

Following continued volatility in the dairy sector, Tesco’s more than 500 British dairy farmers are set to receive a further, much-needed boost, after Tesco announced it will be increasing the price it pays for all of its fresh milk.

From July 1, Tesco will increase the price it pays from 41.59ppl to 46ppl.

It is hoped the rise will help to address the current unprecedented levels of on-farm inflation.

The latest increase comes after prices were increased by close to 20 per cent earlier this year.

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The price Tesco pays its Tesco Sustainable Dairy Group (TSDG) is independently set on a quarterly basis and takes into account inputs such as feed, fuel and fertiliser, resulting in a fair price which is reflective of the cost of production.

Tesco set up the TSDG 15 years ago to address uncertainty and volatility in the dairy sector, with farmers guaranteed a stable price no matter what happens in the market, as well as ensuring they can plan for the future and invest in improvements on farm.