Tesco is to invest £12m over the next three years in a new aligned group of potato farmers who will be paid above the cost of production.
The Tesco Sustainable Farming Group - Potatoes, will launch in September and would help safeguard the future of the beleaguered potato farming sector, the retailer said, with growers “benefiting from greater financial certainty, allowing them to invest in their businesses for the future”.
The scheme was the first of its kind to be offered to potato farmers by a major UK supermarket, Tesco claimed, and would be made up of a collection of producers from across the country and industry experts who will aim to “build stronger relationships across the whole supply chain to ensure customers are offered the best range and varieties at the right price”.
With potato consumption plummeting and the number of potato growers across the country falling by more than 85% during the past two decades from 14,000 to just over 2,000 [AHDB], the TSFG would take some of the pressure off British growers, said Tesco commercial director for fresh foods Matt Simister.
“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,” Simister added. “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, producers will be given direct contracts with Tesco and a three-year rolling commitment that will guarantee the volume of the crop that the supermarket will buy in advance.
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 produce for the retailer.
Tesco declined to place an exact number of participating farms at launch, however it is understood it could roll the scheme out across its entire potato supply chain over time.
The announcement of the scheme, which will complement similar above the cost of production initiatives by Tesco in liquid milk, cheese, lamb, pork, beef, chicken, salmon and free-range eggs, was welcomed by the NFU.
It would provide a “greater level of security, confidence and transparency to growers” said NFU horticulture and potatoes adviser Lee Abbey.
“We’re pleased that Tesco has followed through its commitment, first announced at the NFU conference in 2014, to develop a dedicated potato contract,” he said.
“The 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.”