Tesco launches dedicated farmer contracts for beef and pork

DIRECT contracts with beef and pig farmers are being rolled out by Tesco from January.

The supermarket says it is a £25 million annual investment.

It will firmly link the price paid for pigs with feed costs and will be reviewed monthly. For Angus-sired cattle destined for its Finest beef range, which accounts for between 15 and 20 per cent of retail volume, the contract will pay a 40p/kg premium over the England and Wales R4L average for in-spec carcases.

This could be worth an estimated £140 per beast.

Although currently restricted to pork and Angus-sired beef, Derek Lawlor, meat, fish and poultry director said this was ‘just the start’.

He also stated that Tesco Sustainable Farming Groups, run by committees of farmers, would at some stage look at the possibilities for a broader range of beef and possibly other species, notably lamb.

Mr Lawlor said the contracts with about 140 pig producers and 1,000 beef farmers, would last for up to 36 months, giving them more security, the ability to plan ahead and a guaranteed fair price.

He 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 help secure the industry’s future in this country.”

The establishment of the new groups follows on from Tesco’s established dairy group (TSDG) whose members receive a milk price which is linked to cost of production.

The NFU has welcomed the development. President Peter Kendall said a long-term direct contractual commitment should be praised: “Tesco is in a unique position as UK agriculture’s biggest customer allowing these contacts to have significant impact on both sectors.

“The move comes hot on the heels of the vision document for the beef industry the NFU released in September this year. We’ve been delighted to be able to co-operate with Tesco latterly on the development of the model and wish the company every success in making this work for both consumers and farmers.”

The National Pig Association chairman Richard Longthorp said his association applauded Tesco for developing its sustainable pig group and working directly with farmers.

Mr Longthorp said: “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.”

Defra secretary Owen Paterson said: “Farmers and retailers will thrive when they work together for the future of the whole industry. This is an excellent scheme.”

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