UK: Farmers’ leaders praise new Tesco scheme to help pig and beef farmers

Farmers’ leaders have heaped praise on a new Tesco initiative to help UK pig and beef farmers.

The National Farmers’ Union said its announcement this week that it was launching direct contracts with beef and pork farmers was “a positive move to improve supply chain relationships”.

The supermarket giant’s planned Sustainable Farming Group for Pigs could mark a watershed in the fortunes of the British pig industry, the National Pig Association (NPA) said.

NPA general manager Dr Zoe Davies said the new direct contracts, which should be available to around 140 pig producers and 1,000 beef farmers early next year, “could help transform British pig production.”

“British pig-keepers have been plagued by short-term supply chains and volatile costs, which have prevented them from investing for the future,” she said.

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The NPA said it had worked closely with Tesco on the new supply contracts and sees them introducing an unprecedented level of transparency in the supply chain for high welfare, independently-audited British pork.

It has commended Tesco’s vision in introducing radical new supply policies at a challenging time in the British High Street, and plans to continue working closely with the nation’s largest retailer on the initiative.

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The new Tesco whole-carcase supply groups will be administered by farmer-led committees which will review prices every month, taking into account the impact of feed costs on cost of production.

“This transparency and the direct linking of pig price to increasingly volatile costs should bring benefits to the whole chain through fairer sharing of risk and reward,” said NPA chairman Richard Longthorp.

NPA is working with Tesco to publicise the new supply group, so that producers have an opportunity to express an interest in being considered for the group.

The NFU said the changes mean that Tesco will now source its beef and pork for specialised lines from dedicated farmer suppliers, which will help them provide a more consistent product for customers. In return, farmers freely entering into a contract to supply Tesco will benefit from clear pricing commitments linked to cost of production for pork and a market premium for beef.

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. While the contract will not suit all farmers, we do believe that these arrangements will foster stronger relationships and importantly give producers the confidence to invest in their businesses for the future. Tesco is in a unique position as UK agriculture’s biggest customer allowing these contacts to have significant impact on both sectors.

“These groups build on the success of the long-standing Tesco Sustainable Dairy Group which the NFU backed in 2007 following our vision for the dairy industry and 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 Tesco Sustainable Farming Group for pork will include around 140 pig farmers. Prices will be reviewed monthly and linked to actual feed prices, and contracts will include six month notice periods to give farmers a more stable working environment. The group will be run by a committee of farmers who will act as a liaison between Tesco and the group.

The Tesco Sustainable Farming Group for beef will include around 1,000 farmers and like the pig scheme will be run by a committee of farmers. Contracts of up to 36 months will be offered allowing farmers to invest and plan ahead, while a 40p/kg deadweight bonus over the published average price will also form part of the offer.

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