In a move designed to help take the pressure off British farmers following rising feed prices, the retailer 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.
In an industry first, 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: “As British agriculture’s biggest customer, we’re delighted to be announcing this new way of working with British beef and pig farmers.
“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.
“Not only will our customers enjoy even more high quality, high welfare British meat in our stores, 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.”
Environment 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 which will give more certainty to beef and pork producers.
“Freeing up businesses from unnecessary burdens and getting them the right support will lead to a stronger UK production sector, which will allow British farmers to take advantage of the huge opportunities to supply markets at home and all over the world.”
NFU President Peter Kendall said: “Tesco’s desire to establish a dedicated relationship with producers matched with a long term direct contractual commitment should be praised. We believe that these arrangements will foster stronger relationships with the farmers involved and ensure that Tesco is able to provide a consistent product for consumers.”
National Pig Association 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. It will also mean that Tesco will be able to secure its supply of high welfare, independently audited, British pork for its customers in the face of otherwise reducing supplies.”
Tesco will work directly with around 140 pig farmers who will supply the retailer with the majority of its own brand fresh pork. With feed prices liable to fluctuations outside the control of farmers, the scheme will see prices for meat reviewed on a monthly basis with feed taken into account.
The retailer will also work with around 1,000 beef farmers who will supply Tesco with all its Finest brand beef. This will be reared exclusively from Aberdeen Angus cattle.
All livestock farmers in the Tesco Sustainable Farming Groups will be offered contracts up to 36 months, to make sure they can plan for the future.
The new way of working is likely to affect up to 10% of pork and beef farms in the UK, with livestock in both groups reared to meet Tesco’s high welfare standards.