Tesco is to introduce a new cost of production contract for lamb producers across the UK. The retailer states that this contract will see farmers involved receive a price based on the average cost of production.

The price will be set for 12 months, before being reviewed for the second year of the contract. The announcement was made at the Royal Welsh Show, with Welsh farmers to make up a third of those in the scheme.

All the farmers involved are part of Tesco's sustainable farming group for lamb, a group set up in 2014 to help Tesco’s relationship with British lamb farmers and processors. The group meets on a regular basis to share knowledge, customer insight, and best practice around sustainability and animal welfare.

George Wright, Tesco’s commercial director for fresh food said: “We know many lamb farmers are looking for stability to overcome the uncertainty surrounding CAP payments, so we’re delighted to be offering these industry-leading COP contracts to 160 lamb farmers across the UK.”

Suppliers

Richard and Sarah Wilde, lamb farmers from Welshpool, Powys have been supplying Tesco with lamb for over five years and they stated that the “cost of production model is great news” for their farm as it “gives us a guaranteed price for our lamb for the next 12 months”.

It means we and other lamb farmers in Wales and across the UK can invest and plan for the future with confidence.

Tesco is actively looking for more farmers to join the scheme, with next year’s contracts starting on 1 April 2019.

The news comes just weeks after Tesco announced new contracts for its Aberdeen Angus beef farmers and the relaunch of its sustainable farming group for beef. Tesco now operates 10 Sustainable Farming Groups covering areas including lamb, beef, poultry and eggs, cheese and potatoes.