Supermarket giant Tesco is defending itself against accusations that it is destroying the livelihoods of dairy farmers by not paying enough for milk.

The UK's biggest supermarket chain said it was sympathetic to farmers' plight - but said it was the strength of the pound which was reducing farmers' subsidies in real terms.

Teams of dairy farmers picketed Tesco distribution depots on Sunday.

The Farmers for Action group wants supermarkets to offer higher milk prices.

Two other leading supermarket chains, Safeway and Waitrose, have had talks with farmers about raising the price of milk.

Tesco said it was restricted by law from adopting such practices.

"Our hands are tied legally. To collude together to up the price of milk is illegal under competition law," said a company spokesman.

"Moreover, we do not buy directly from farmers, but from milk processors, who then pay farmers.

"Even if there are raised prices, there is no guarantee the extra revenue would reach farmers.

"However, we are very concerned that the price that farmers are getting is too low.

"Because farmers are paid their subsidies in euros, which are then exchanged into pounds, they are getting fewer pounds in subsidy than they once did."

The spokesman added: "We are really sympathetic - but we see the solution in terms of better marketing and developing new products."

Protesting farmers

Earlier this month, more than 100 dairy farmers travelled to London to protest to MPs about the crisis in the dairy industry.

The chairman of the National Farmers' Union milk and dairy produce committee, Terrig Morgan said: "The scale of the desperation is obvious for all to see.

"The industry badly needs help and that means an immediate price increase."

Mr Morgan, a dairy farmer from North Wales, added: "Both dairy companies and retailers must realise the desperate point dairy farmers have reached and that it is in their own interests to bring an immediate halt to the flow of milk producers out of the industry."