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The discounter has moved to a new producer pricing model that will pay the cost of production and guarantee minimum volumes

Lidl has announced a £500m investment in its British pork supply chain and created a new pork producer group to drive industry collaboration on animal welfare and emission reduction.

The five-year investment plan, in partnership with the discounter’s pork suppliers Cranswick and Pilgrim’s Europe, will see Lidl move its pork producers to an “open-book producer costing model” that includes the on-farm cost of production, guarantees minimum producer volumes, and includes a fixed margin for farmers.

Lidl said the new pricing model, developed in collaboration with pork producers through its newly created Lidl Pork Producer Group, was a reaction to the need for “a more sustainable pricing model within the pork sector for suppliers and farmers”.

Through the new producer group, the retailer will also fund research and development projects aimed at mimicking the natural behaviours of pigs, such as rooting, sniffing and chewing, in turn improving their overall wellbeing.

And in a new trial, 3D cameras have been introduced to record the nature and frequency of the animals’ enrichment interactions, with the data being subsequently used to enhance welfare, Lidl said.

The discounter will also invest in assessing the carbon footprint of all the farms in the producer group and subsequently introduce plans to reduce these emissions, it added.

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And alongside this, it will also invest more than £250,000 in at-risk GB catchments to support river health and water quality, while working to achieve deforestation-free soy sourcing by the end of 2025.

The investment follows an injection of over £14m into the industry at the height of the pig crisis in 2022, when the market price fell far below farmer cost of production and the sector was plagued by damaging backlog of animals on farms caused by butcher shortages and the loss of export markets.

Lidl said its latest move would address ongoing “sector-wide challenges” that followed the crisis, with the sector still seeing elevated production costs.

Being the second-largest retailer to have a 100% everyday fresh British pork pledge, the investment also represented “a doubling down” by the discounter on its support for British producers, it added, and “ensures the continued production of high-quality British product at the best possible prices for customers”.

Lidl is the fourth-largest retailer in the fresh pork category, with an 11% market share by volume [Kantar, March 2024].

“This latest investment underlines our commitment to British producers, animal welfare and the environment,” said Lidl chief commercial officer Richard Bourns.

“Acknowledging the challenges faced by the industry and its farmers in recent years, we recognised the need for intervention and the development of a bespoke solution addressing these challenges,” he added. “That’s why we’ve been working closely with our suppliers and farmers, including major partners such as Cranswick and Pilgrim’s, to ensure we understand the intricacies of this supply chain and are well positioned to deliver impactful change.”

Given its pork market share, the investment also highlighted the “substantial influence we have in this area and we’re embracing our responsibility to drive positive change”, Bourns said.

“Our new pork standard is all about supporting our rural communities and ensuring the resilience of the sector while providing customers with high-quality British pork at affordable prices.”

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The retailer’s announcement was welcomed by National Pig Association CEO Lizzie Wilson, who said it would continue its commitment “to ensuring a sustainable supply of domestic support”.

Cranswick had already commenced “groundbreaking research trials aimed at enhancing pig welfare and are excited to work in partnership with Lidl for years to come”, said the processor’s pork farms MD Rick Buckle.

Pilgrim’s Europe operations director for agriculture Fábio Brancher said: “With Lidl’s support, this collaborative approach will provide crucial stability for our third-party farmers, shielding them from market volatility and aiding their recovery from recent challenges.

“This next step with Lidl underscores our commitment to supporting British farmers and fostering a sustainable future for the sector, and we look forward to developing our relationship further.”