UK retailer Tesco introduces three-year contracts for potato growers and packers

UK Supermarket chain Tesco has announced it will issue contracts worth £12 million over three years to help support British Agriculture, and become the first retailer in the UK to introduce new long term contracts for potato growers and packers. This will help to safeguard the future of UK farmers who supply the supermarket and provide customers with the best quality produce.

Through the Tesco Sustainable Farming Group - Potatoes (TSFG-Potatoes), growers will benefit from greater financial certainty, allowing them to invest in their businesses for the future.

The TSFG-Potatoes will be made up of a collection of producers and industry experts from across the country, and will aim to build stronger relationships through the whole supply chain to ensure customers are offered the best range and varieties at the right price.

The group will also take some of the pressure off British potato growers, who are faced with the challenges of difficult growing conditions, declining consumption and an increasingly volatile market.

Matt Simister Tesco’s Commercial Director for Fresh Food said:

"Working collaboratively with our suppliers to ensure we provide the highest quality fresh produce for our customers is right at the heart of what we do."

"Whilst there isn’t a single simple solution to resolve the uncertainty faced by many potato growers, it’s important that we all play our part. These new contracts will help to bring more confidence back into the whole potato supply chain and build a truly sustainable British potato industry."

Under the new scheme, from September, producers will be given direct contracts with Tesco and a three year rolling commitment which will guarantee in advance, the volume of the crop that the supermarket will buy.

TSFG growers will also receive a price based on their production costs, which will take into account inflation, farming inputs like the cost of fertiliser and the additional expenses involved in growing high quality fresh produce for customers.

By developing a structure to guarantee a fair price for their produce, Tesco hopes the scheme will pave the way for other retailers to work more collaboratively with growers, and help secure the future of the British potato industry.

NFU Horticulture and Potatoes Adviser, Lee Abbey, said:

"The NFU welcomes initiatives that provide a greater level of security, confidence and transparency to growers and we’re pleased that Tesco has followed through its commitment, first announced at the NFU conference in 2014, to develop a dedicated potato contract."

"The Tesco Sustainable Farming Group is a great example of how collaboration can work and it fits very much within the principles of the NFU’s Fruit and Veg Pledge. We hope growers are able to benefit from this new approach."

Potato grower Crawford Black from Fife, Scotland said:

"These new three-year rolling contracts will give my family business more confidence to look further ahead, make plans and invest for the future, safe in the knowledge that we have a long-term commitment from Tesco to continue to work with us."

Over the past two decades, the number of potato growers across the country has fallen by over 85 per cent from 14,000, as an unpredictable trading environment, poor harvests and producers leaving the industry in favour of alternative crops. Tesco has a long history of supporting British Agriculture through a number of farming groups and programmes to help support farmers, growers and producers with their farming input costs.

In 2007 the Tesco Sustainable Dairy Group was formed for dairy farmers who produce Tesco’s own-label fresh milk and now have similar schemes for cheese, lamb, pork, beef, chicken, salmon and free-range eggs. They foster real expertise, innovation, efficiencies for businesses, whilst also producing high quality food for customers.