Cut-price stores like Aldi and Lidl are selling milk at 22p per pint – with farmers feeling the pinch in their pockets.
They say they are feeling the strain as they make a loss on every litre they churn out.
And two-litre cartons of milk at Farmfoods retail at £1 each or two for £1.60, which is 23p a pint.
Tesco and Asda also offer deals to customers who buy two four-pint cartons, which work out at 25p per pint.
The price war is no surprise to the Scottish farmers’ union, who say 50 farms went under last year, landing the dairy industry in a full-blown crisis.
Kenneth Campbell, chairman of NFU, Scotland’s milk committee, said: “We’re not asking customers to pay any more for milk.
“All we’re asking for is a fair slice of the cake.
“The supermarkets have huge profit margins, yet farmers are the ones who suffer.
“We should have a flourishing dairy industry in Scotland as we have the skills base and the climate.
“But we don’t and the business is stagnant.
“Farmers have faced a massive increase in costs of animal feed, diesel and fertiliser.
“They are working at a loss and can’t possibly afford to invest.
“It’s a case of keep your head down and hope that things get better.
“It’s pretty appalling with the production costs that milk is now being sold for less than bottled water.
“The milk processors and the supermarkets have a part to play in that.
“They are the ones who are responsible.”
A spokesman for Tesco said: “Against a backdrop of volatility in the marketplace over the past months and recent weeks, we are committed to base the price paid to our dairy farmers on the cost of production.”