Against a background of declining pig supplies, Tesco announced its intention to establish a direct relationship with a dedicated group of pig farmers, with prices reviewed monthly and linked to the cost of production and feed prices.
As part of its £25m investment in British farming, Tesco announced plans to set up 'Sustainable Farming Groups' to underpin its beef and pork supply.
For its pig supply, Tesco said it wished to establish contracts with 140 producers, covering supply of 15,000 pigs per week. The contract period would operate for 36 months, with prices reviewed on a monthly basis. Tesco will undertake to pay an ‘above average price’, linked to cost of production and feed costs and aims to have arrangements in place by January.
The move was welcomed by British pig industry interests and was given favourable coverage in the farming press.
It remains to be seen how the new contracts will be managed via the intermediary link of abattoirs and processors.
If Tesco are successful in recruiting the target number of producers, this will account for a significant proportion of their pork and bacon supply. However, it will fall short of the Waitrose pork supply chain through which it sources all its pork through a dedicated pool of farmers via Dalehead Foods.
Similar initiatives were introduced by Sainsbury and Asda during the last year.