Tesco has unveiled fresh financial incentives for over 400 British farmers, which it said could see them benefit from more than £9.5m of extra payments over their first year.

From September, 260 UK dairy farmers who belong to the retailer’s sustainable dairy group (TSDG), and who supply milk via Muller UK, will receive up to an additional 2.5p per litre of milk if key targets on emissions reduction, animal health, feed conversion efficiency and genetic improvements are met.

Additionally, the group will participate in a “baselining” exercise during the next year to establish targets for soil, water and biodiversity improvements.

The grocery giant said it was using the extra financial incentives and data collection to hit key environmental and animal welfare targets.

The retailer is also rolling out incentive plans for other sustainable farming groups. Up to 160 farmers in the supermarket’s sustainable lamb group (TSLG) will earn bonus payments from planting herbal leys.

Tesco’s sustainable pig group (TSPG) will also gain incentive payments over various different metrics, such as animal welfare improvements, biodiversity and soil health, and emissions reduction.

The business said it was responding to feedback from farmers it gathered as part of its Greenprint for UK farming report, which laid out recommendations for government and the sector to ensure a transition to a low-carbon UK agriculture industry.

One of the key recommendations comprised of exploring new payment models and incentives.

The supermarket’s UK CEO Ashwin Prasad said: “Earlier this year, as part of our farmer-led Greenprint for UK farming report, we published a set of recommendations for the government and industry aimed at ensuring the UK agriculture sector is equipped to transition to a low-carbon future.

“A key area identified by farmers was the introduction of incentive schemes to help achieve our shared sustainability goals. These incentives will play a crucial role in ensuring our farmers remain economically and environmentally sustainable for the long-term.”

In other sustainability moves, Tesco launched a solar-powered chilled delivery fleet in June, as part of its efforts to cut carbon emissions across its operations.

The UK’s largest grocer began incorporating five battery- and solar-powered endurance units from British engineering firm Sunswap to its Peterborough depot fleet.

Click here to sign up to Retail Gazette‘s free daily email newsletter