Sainsbury’s offers five-year supply contracts to more farmers

Supermarket Sainsbury’s is widening the range and extending the number of producers covered by long-term contracts in a move to bring more stability to its supply chain.

The multiple retailer says that, by the end of this year, more than 2,500 British farmers will be backed by long-term contracts, equivalent to 60% of its own-brand fresh food suppliers.

See also: Lidl invests £1.5bn in British beef and cutting farm emissions

Together, they will deliver over 3.1m tonnes of fresh food – including milk, carrots, mushrooms and poultry – worth an estimated £5bn to farmers over the lifetime of the contracts.

Berry growers are among the main beneficiaries of the latest rollout, with Angus Soft Fruit, Chambers, Soft Fruits Direct, J.O. Sims and Dyson Farming all offered five-year contracts.

“Soft fruit has typically relied on short-term, seasonal agreements,” said a spokesman. “These new long-term partnerships will give growers the security they need to invest in their future, including in sustainability and innovation.”

New contracts are being developed for other fruit and veg growers and will be rolled out in the coming months, “benefiting hundreds more farmers”, said the spokesman. 

Cost of production

Sainsbury’s was one of the first retailers to offer long-term contracts, starting with dairy producers some 20 years ago, where farmgate prices were linked to the cost of production.

This approach was subsequently extended to other sectors, including eggs, poultry, mushrooms, pork and beef.

Simon Roberts, chief executive of Sainsbury’s, said: “We’re proud to lead the way on long-term farming partnerships and cost of production models – with some of the longest in UK retail, backed by billions of pounds of committed investment.

“When farmers know what we’ll buy, at what price and for how long, they can plan, invest and keep producing the great tasting, responsibly sourced British food our customers trust.”

Defra farming minister Angela Eagle applauded the initiative, which she suggested would give farmers more certainty and confidence to invest.

“Long-term investment in the British farming sector is vital to help secure more homegrown, high-quality food for families, strengthen supply chains, and support innovation and sustainability,” she said.

Defra’s own recent Opinion Tracker shows that only 30% of farmers feel positive about their future, continuing a downward trend.