Tesco is set to launch two-year contracts for beef farmers with its beef processor St Merryn.

The contracts, which Tesco is hailing as the UK’s first “long-term direct contracts between beef farmers and a major retailer”, will initially be offered to 100 farmers, but Tesco plans to extend this in 2014.

The farmers will be paid an agreed base price for their beef, with additional premiums available if certain carcase and environmental standards are met.