TESCO'S announcement of a 0.5p per litre price rise for its dairy farmers has received a mixed reaction.

Gwyn Jones, chairman of the National Farmers' Union Dairy Board, said that, although small, it was "a move in the right direction".

But Tim Farron MP, chairman of the all-party parliamentary hill farming group, described it as "paltry".

He wrote to Sir Terry Leahy, chief executive of Tesco, in March urging him to pay 30p a litre, as recommended by the Promar International consultancy.

Mr Farron, MP for Westmorland and Lonsdale, said: "I pointed out that dairy farming in this country was in trouble, and that the loss of Britain's dairy industry would be a huge blow for farmers, the countryside, and the environment."

He said Tesco's 28ppl price is the largest paid by any of the major supermarket chains, but was far short of the 30p the industry requires.

He added: "Tesco should re-evaluate its priorities and take the opportunity to take a lead by treating farmers with respect."

Meanwhile, the NFU said it was encouraged by Tesco's action. Their contract with producers was described as "ground-breaking"

when announced 12 months ago.

Mr Jones said: "The relationship between the producers and Tesco is still at an early stage, but we've been encouraged by what we've seen so far, with genuine effort to forge closer relationships, create representative structures, and communicate specific requirements under the contract to producers.

"What concerns us more is the apparent inertia from the rest of the industry in driving milk prices upwards at a time when dynamic cost pressures, falling production, a weak pound and solid cheese market all point to further milk price increases to farmers."