Asda contract aims to share price risk

Asda has launched a new contract for its beef breeders and finishers that aims to reduce exposure to market volatility and secure supply.

It is offering a group of BeefLink farmers a pre-agreed R4L carcass price of £2.70/kg, with a “price easing mechanism” that halves the impact of any future price rise or fall. For example, if the base R4L market price falls to £2.50/kg, contracted farmers will be paid £2.60/kg and if the price rises to £2.90/kg, producers will receive £2.80/kg.

The contract is initially being trialled with a small group of farmers supplying meat through the Dawn Meats’ Cardington abattoir in Bedfordshire, but if successful the supermarkets plans to extend it to other BeefLink members.

Senior beef buyer Jim Viggars said the scheme would help Asda ensure future supplies of UK suckler-bred beef, while enabling beef farmers to plan more confidently.

“The price easing mechanism in the contract means both Asda and its BeefLink producers will share the risks and rewards of beef production,” he said.