Tesco has confirmed it is looking to develop a cost-of-production contract for lamb, but stressed it would be a number of months before the detail was worked out.
A spokeswoman for the retailer said the company would start work on the contract in the new year, with input from processors, farming unions and a group of about 100 farmers.
“In the new year we will be going though the process and looking at what is the best model to have. We want to get a possible plan of action to move forward.”
The spokesman said reports that the supermarket would only be working with young farmers on the project were incorrect.
Tesco wanted to work with innovative farmers who had ideas about how to make the sheep sector more sustainable and that would include people of all ages, she said.
According to a poll run by Farmers Weekly, sheep producers have mixed opinions about the desirability of cost-of-production contracts for lamb.
A straw poll of 77 farmers carried out in early December found 55% were in favour while 45% were against.
One of the challenges for Tesco and the farmers involved in the project will be establishing what the cost-of-production figures should consist of, given differences in geography and farming system.
The fact that retailers don’t take the whole of the carcass from processors is another complication that will need to be ironed out.
Tesco has said it will issue more detail about the plans in the new year.