More than 400 dedicated dairy farmers are benefiting from a price increase through supplying milk to Tesco.

The supermarket has completed almost half of its ‘direct deal’ contracts which sees suppliers receive about 22p/litre.

The deal, announced in April, sees Tesco work in partnership with Arla and Robert Wiseman Dairies to secure direct contracts with dedicated milk suppliers.

A further 450 dairy farmers are set to benefit by the end of the year when the supermarket rolls the contract out across the whole of its supply base.

Kari Daniels, Tesco’s head of dairy, said: “This initiative means a major restructuring of our milk business, so naturally it does take some time to implement.

“But the response from the industry has been fantastic and I’m delighted at the speed with which we have got these contracts in place.

“We are already achieving what we set out to do, which is to forge much closer relationships with the farmers which supply us with milk – and make sure they are being paid a price which reflects their production costs.”

Gwyn Jones, NFU dairy board chairman, said Tesco’s speed in implementing the scheme showed its commitment to the project.

“Its great news that so many farmers are already benefiting and we look forward to this being rolled out to the whole of Tesco’s supply chain later this year.”