There are strong incentives for farmers to install vending machines - it arbitrages a pretty big margin between prices at the farm gate and the supermarket. Farmers get around 70c /litre for bulk milk, so selling direct for $2 or the $2.50 these people charge is quite attractive and still a reasonable deal for consumers.
Consumers also get what you might think of as a "provenance" benefit. They know exactly where the milk comes from. Assuming that Tesco knows what its doing, this is worth something.
Two other interesting features from this story.
- they are selling "lightly pasteurised" instead of raw, though one of their new machines will sell raw milk - sounds like a sensible diversification strategy and it differentiates them from the other three.
- their natural inertia was finally overcome by Fonterra cancelling their winter milk contract - nice work big guys!