From August 17 and "for the foreseeable future," Asda will pay Arla Foods 28 pence per litre of milk - a premium it expects will be passed on the dairy's British farmer owners.
Arla recently reduced its farm gate milk price (FGMP) to 23.01 pence per litre - significantly less than the 30 to 32 pence it costs British dairy farmers to produce a litre of milk.
"Today, we have confirmed to our milk supplier, Arla, that we are increasing the price we pay per litre from Monday to a level that will assist our farmers during the current crisis," said an Asda spokesperson.
Asda added it is "not passing on any of the costs to customers - our retail price stays the same."
The National Farmers Union (NFU) welcomed the move, branded it a "significant leap forward in recognising the true value of British dairy products."
“The NFU has been lobbying tirelessly for Asda to recognise the plight of the dairy industry so we are pleased that Asda has moved to support farmers in their hour of need,” said Meurig Raymond, president, NFU.
“It is clear from Asda that this commitment is to support the UK dairy industry at a time of crisis. It is now important that Arla ensures this is delivered to British farmers on the ground, with immediate effect," Raymond added.
Milk for Farmers
British retailers, including Asda, have been hit by a series of in-store demonstrations by struggling dairy farmers in recent weeks.
Earlier this month, dairy farmers protesting the low retail price of fresh milk removed large quantities of the product from stores - a campaign Farmers for Action (FFA) dubbed the Milk Trolley Dash.
Days later, farmers led two cows into an Asda store in Stafford.
Earlier this week, Asda rival Morrisons launched a new premium milk brand that will offer consumers "the choice to support dairy farmers directly.”
Ten pence per litre from the sale of four pint (2.27 litres) bottles of Morrisons Milk for Farmers, set to hit shelves in the UK in Autumn, will be passed directly to the Arla farmers that produce it.
"We recognise that the current market for liquid milk is impacting on hard working dairy farmers and their families," Morrisons said in a statement. "We want to help."