Tesco’s and Noble Foods’ feed-linked egg contract has won this year’s British Free-Range Producers Association’s (Bfrepa) Break Through Award.
The award, presented at the recent Bfrepa conference in Birmingham, recognised the role of the contract in helping producers deal with feed market volatility.
In essence, every £5/t change in feed price is offset by a 1p/doz move in egg price, so helping producers manage their risks.
The feed tracker contract, which was introduced earlier this year, has been offered to nearly 400 free-range egg producers and is benefiting three million layers – about 10% of the UK flock. Similar contracts are also in place for Tesco’s fresh poultry suppliers.
Although the contract, which runs until February 2019, forced producers to accept a 2.5p/doz price cut to enter the deal, it has benefited farmers.
Patrick Lynn, who runs the 32,000-bird Hockerwood Eggs in Southwell, Nottinghamshire, said the contract had undoubtedly been a good development.
“It has brought security in a world of volatile feed prices and allowed the confidence to plan for the next few years, not just the next few months.”
James Holloway, from Stanwick, Northamptonshire, said: “It takes the unpredictability out of the job. I no longer have to worry about what commodity traders are doing, and it’s good to see a retailer making a long-term commitment to work with producers.”
A Tesco spokesman said he was delighted the model has been recognised as a standard-bearer for the industry.
“By introducing an above-the-cost-of-production model, we are able to offer our farmers valuable security in a volatile market, allowing them to focus on what matters most to customers – quality, value, animal welfare and service.”