Tesco is to offer potato growers and packers new long-term contracts to bring greater financial security to the category following advice from its potato grower group.
Under the new scheme, which will begin in September, producers will be given direct contracts with Tesco and a three-year rolling commitment that will guarantee in advance the volume of the crop that the supermarket will buy. In total the new contracts are worth £12 million.
Growers in the Tesco Sustainable Farming Group – Potatoes (TSFG-Potatoes) will also receive a price based on their production costs, which will take into account inflation, farming inputs like the cost of fertiliser and additional production expenses.
Tesco said the new structure means it is the first UK retailer to introduce long term-contracts for potato suppliers, a move that it said helps to safeguard the future of British farmers.
The TSFG-Potatoes group will include producers and industry experts from across the country, and aims to build stronger relationships through the whole supply chain, Tesco said.
Tesco commercial director for fresh Matt Simister said “working collaboratively with suppliers” is at the heart of the business. “While 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,” he said. “These new contracts will help to bring more confidence back into the whole potato supply chain and build a truly sustainable 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, 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 previously formed other grower groups, including in the dairy, pork, beef and lamb sectors. “They foster real expertise, innovation, efficiencies for businesses, whilst also producing high quality food for customers,” the company said.
The retailer has previously said it would look to form longer-term relationships with suppliers across its produce categories.
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