Tesco has cut the price of four pints of milk in its stores from £1.39 to £1.
Last week, Britain’s biggest supermarket announced a £200m investment to lower the prices of popular food staples such as tomatoes, onions, peppers, cucumbers and milk.
The retailer has said this new milk price would not effect how much the 650 farmer-suppliers in the Tesco Sustainable Dairy Group will be paid.
Farmers in the group are paid on a cost-of-production contract, calculated by consultant Promar International.
But there will now be pressure on the other supermarkets to cut their retail milk price as well.
Tesco commercial director John Scouler said the supermarket cared about where its milk came from which was why it had set up the sustainable dairy group.
“We promise our farmers will always be paid a fair and independently agreed price for their milk, so they can invest in the future of their farms and provide higher welfare standards for their cows,” he said.
“When our customers buy their milk at Tesco, they can be confident that it’s responsibly sourced and at a fair price for all.”