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Tesco announces new deal for pig producers

By Rick Pendrous , 08-Nov-2012

Britain’s pig producers are hopeful of a brighter future as Tesco follows Waitrose’s example in entering a dedicated deal with farmers.

Tesco has offered a new deal to pig and beef producers

Tesco has offered a new deal to pig and beef producers

Tesco announced today (November 8) that it would work directly with UK beef and pig farmers in a new deal worth £25M a year.

Speaking at the 2012 David Black Award presentation at the House of Lords yesterday before today’s announcement, Stewart Houston, chairman of BPEX, the pig producers’ levy paying body, said the initiative would probably force other retailers to follow suit.

“Some [retailers] like Waitrose have shared the risk with their dedicated suppliers. That cash, while welcome, only went to the chosen few,” said Houston. “All of that could change as Tesco upped the ante, announcing it wanted a closer direct relationship with dedicated pig producers.”

Houston added: “It won’t happen overnight but could be a tipping point as retailers fight for supply in a shortened market, as a result of feed prices and the effects of the 2013 welfare directive.”

Rising feed prices

In a move designed to help take the pressure off British farmers following rising feed prices, Tesco will create two new groups, run by committees of farmers, which will guarantee beef farmers an above-market price for their meat and a price linked to the cost of feed for pork farmers.

Tesco will work directly with about 140 pig farmers who will supply the retailer with most of its own-brand fresh pork, with prices reviewed on a monthly basis and feed taken into account. It will also work with around 1,000 beef farmers.

Farmers in the groups will be given direct contracts, which will last for up to 36 months, giving them more security and the ability to plan ahead and a guaranteed price for their meat.

Derek Lawlor, meat, fish and poultry director at Tesco, said: “As British agriculture’s biggest customer, we’re delighted to be announcing this new way of working with British beef and pig farmers.

“Pig farmers have been under pressure with significant rises in feed prices so it means a great deal to work in partnership with them and British beef farmers to help secure the industry’s future in this country.

High-welfare British meat

“Not only will our customers enjoy even more high-quality, high-welfare British meat in our stores, the Tesco Sustainable Farming Groups, like our pioneering dairy group before them, will guarantee farmers a fair price for their meat and allow them to invest and plan for the future.”

Houston said fears of future pig meat supply shortages would force more retailers to enter into dedicated supply arrangements with farmers.

Soaring feed wheat and soya prices and the higher welfare costs likely when the partial sow stall ban comes into effect on January 1 2013 are driving up the costs of pig meat. As a result, more pig farmers across the EU are expected to exit the sector, following the lead set by UK farmers already faced with higher animal welfare costs, said BPEX. It warned that this would result in decreased availability and further push up the price of pig meat.

Meanwhile, the 2012 David Black Award was made, for the first time, to a retailer: Heather Jenkins, director for buying for meat, poultry, fish, frozen and dairy at Waitrose. Jenkins received the award for having “transformed British pork and pork products into sustainable, high-quality, aspirational food”.

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