Camgrain seals multi-million pound Sainsbury deal
East Anglian grain co-op Camgrain has signed a multi-million pound deal with Sainsbury’s to become the sole supplier of wheat used in the supermarket group’s bread.
In the first arrangement of its kind in the arable sector, the supermarket has agreed a two-year contract through grain merchant Grainfarmers to use flour from the co-op in its 360 in-store bakeries across the UK.
The agreement will see 55,000t of the 85,000t of milling wheat Camgrain’s 300 members produce go to Northamptonshire millers Whitworth to supply the supermarket.
Camgrain will supply 80% of the grain Sainsbury’s needs with immediate effect, while the supermarket intends to source 100% of its grain from the co-op by 2009.
If successful, Sainsbury’s hopes the deal will be extended to 2011, while volumes could also be raised.
Sarah Mackenzie, Sainsbury’s in-store bakery bread buyer, said it would be the first supermarket to have fully traceable flour.
A new dedicated wheat pool means Sainsbury’s will know exactly where the flour in its bread comes from.
“We were initially told it wasn’t possible to establish this kind of relationship with the volumes we needed. But by working with Grainfarmers and Camgrain, we have come up with a contract that will provide greater security for both farmers and Sainsbury’s.”
As part of the agreement, the supermarket will also launch the Sainsbury’s British Flour Development Group to share information and best practice between farmers, the miller and the retailer.
“It will help bring farmers closer to customers,” Ms Mackenzie said. “We will have open dialogue with farmers about what they can do and we will work together to develop markets for British wheat.”
Long-term relationship
John Latham, Camgrain chairman, said the agreement would help farmers better understand issues affecting the supply chain.
“We are already seeing huge benefits in transparency of the supply chain,” he said. “We want to know the drivers in the supply chain and we are looking for a long-term relationship with Sainsbury’s. It is only through working together that we can address our issues.”
While Sainsbury’s declined to reveal how much it would pay for the grain, Ms Mackenzie said it was “committed to paying a fair price” and it was looking to build value for all partners in the chain.
Simon Ingle, Grainfarmers’ head of milling wheat, said the contract was “breaking down the barriers” between farmers, millers and retailers.
Connecting farmers with consumers
“It’s all about regionality and integrity of supply. This contract gives Camgrain the ability to influence the supply chain to its benefit. It’s hugely encouraging,” he added.
Siôn Roberts, English Food and Farming Partnership chief executive, said the partnership between Camgrain and Sainsbury’s was the “future of the farming industry”.
“It’s the perfect example of connecting farmers with consumers,” he said. “It proves it can be done in the arable sector. The fact the contract is long term is very important. This kind of collaboration is the future of the industry.”
Arthur Hill, chairman of the NFU’s combinable crops board, said: “The volatility we saw in global cereal markets this summer, combined with the incredible weather conditions of drought and flood, has served to remind us once more that securing our food supplies is an important issue.
“We are pleased to see that a major British retailer has chosen to engage with the cereal supply chain, which is something we have been encouraging for some time now.”