The retailers will create two new groups, run by committees of farmers, which will guarantee beef farmers an above market price for their meat and a price linked to the cost of feed for pork farmers.
The Tesco Sustainable Farming Group (TSFG) for beef will include around 1000 farmers who will receive a 40p per kg deadweight bonus over the published average price.
The TSFG for pork will include around 140 pig farmers whose prices will be reviewed monthly and linked to actual feed prices.
Farmers in the groups will be given direct contracts, and in response to requests by the farming community, these will last for up to 36 months, giving livestock farmers more security, the ability to plan ahead, and a guaranteed fair price for their meat.
Derek Lawlor, meat, fish and poultry director at Tesco, said: "Pig farmers have been under pressure with significant rises in feed prices, so it means a great deal to work in partnership with them, and British beef farmers, to secure the industry's future in this country.
"The Tesco Sustainable Farming Groups, like our pioneering dairy group before them, will guarantee farmers a fair price for their meat and allow them to invest and plan for the future."
National Pig Association (NPA) chairman, Richard Longthorp said: "The NPA applauds Tesco for developing its sustainable pig group and working directly with pig farmers.
"Creating this direct relationship with its pig farmers will bring an unprecedented level of transparency to the pricing of pigs and pork from farm to fork.
"This transparency and the direct linking of pig price to increasingly volatile costs of production should bring benefits to the whole chain through fairer sharing of risk and reward."
SEVENTEEN top Scottish food and drink companies will go to Japan and China next week as part of the largest trade mission from the sector ever to visit the countries.
The joint initiative between Scottish Development International and Scotland Food and Drink will be headed up by Rural Affairs Secretary Richard Lochhead and comes on the back of Scottish food and drink exports to Asia reaching a record high of more than £1 billion in 2011, with exports to Japan increasing by 25% year-on-year to £91 million.
Within the group are representatives from three major dairy companies – the first Scottish dairy contingent ever to visit China.
This market, such as specialist cheese and butter, offers extensive opportunities for Scottish producers to tap into.