Tesco is to pay its Sustainable Dairy Group members up to 31.58p/litre from 1 October.
The headline price of 31.58p/litre will go to the majority of group members, who provide financial and production information to Promar for the cost tracker model. Group members not participating in the cost tracker will receive a standard litre price of 31.08p/litre from the same date.
The rise follows a 2.02p/litre increase in the cost of milk production for group members from 29.06p/litre to 31.08p/litre, mainly the result of feed cost increases.
Reduced milk production also meant overhead costs had risen on a per litre basis.
There are 700 dairy farmers in the TSDG, whose production costs are reviewed every six months by consultant Promar.
For more on milk prices see our dedicated milk price cuts page.