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Sunday, 23 November 2014

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Farming Matters

WHAT a nice change it is to find myself praising a supermarket.

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Andrew Pye

Tesco’s announcement that it is to launch direct contracts with beef and pork farmers is a positive move to improve supply chain relationships.

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.

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. Contracts will also 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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