Tesco to offer direct supply contracts for meat

Tesco is to offer 36-month contracts to pig and beef producers through two new direct supply farming groups.

These will guarantee suppliers of Aberdeen Angus beef a 40p/kg premium above the EBLEX R4L published price and offer a pig price related to the cost of feed.

The Tesco Sustainable Farming Group for pork will include around 140 pig producers supplying 15,000 pigs a week (and rising) for most of Tesco’s own brand fresh pork.

Pig prices will be reviewed monthly, taking into account feed costs but there is no commitment to cover the cost of production.

Prices would be agreed with an elected committee, quarterly in advance, and would track feed prices, said Derek Lawlor, meat, fish and poultry director at Tesco.

“The whole idea behind the committees of farmers is to establish a fair price for farmers, with their input. We’ve listened to the pig industry and this is what they’ve asked us for,” he said.

The retailer will also work with about 1,000 beef producers to source all the beef for its Finest brand from Aberdeen Angus cross animals through the Tesco Sustainable Farming Group for beef. This will be looking for 2,500 animals a week as the retailer extends the offering of its Finest range across its stores. Current numbers are in the region of 200 a week.

Both the NFU and National Pig Association have welcomed the move.

“The NPA applauds Tesco for developing its sustainable pig group and working directly with pig farmers. Creating this direct relationship with its pig farmers will bring an unprecedented level of transparency to the pricing of pigs and pork from farm to fork,” said NPA chairman Richard Longthorp. “It’s something we’ve been pressing for with all the retailers.”

The NFU said it was a positive move to improve supply chain relationships.

Around three-quarters of Tesco beef is British-sourced, including its Finest and own brand ranges, while about two-thirds of its fresh pork comes from UK producers, with its Finest and Butchers Choice ranges 100% British.