Tesco is to make a multi-million pound investment in the British lamb industry by introducing improved cost of production contracts for around 160 of its farmers.
The announcement is seen as a move to build long-term partnerships between retailer and farmers.
Farmers will benefit from a price based on the average cost of production across the Tesco Sustainable Farming Group for lamb. The price will be set for 12 months, before being reviewed for the second year of the contract.
The group was set up in 2014 to strengthen the retailer's relationship with its farmers and processors. They meet to share knowledge, customer insight and best practice around sustainability and animal welfare.
Tesco made the announcement at the Royal Welsh Show, with around a third of the farmers included in the scheme based in Wales.
George Wright, Tesco’s Commercial Director for Fresh Food said the move will ensure farmers have the confidence to invest in their businesses and build for the future.
“We know many lamb farmers are looking for stability to overcome the uncertainty surrounding CAP payments, so we’re delighted to be offering these industry-leading COP contracts to 160 lamb farmers across the UK,” Mr Wright said.
“Through our ten Sustainable Farming Groups, we’re building transparent, long-term partnerships with our farmers and producers.”
Mr Wright said the "door is open" for more British lamb farmers to join Tesco and "take advantage of the new model." Next year’s contracts start on the 1 April.
The news comes after Tesco announced new contracts for its Aberdeen Angus beef farmers and the relaunch of the Tesco Sustainable Farming Group for Beef.
Tesco now operates 10 Sustainable Farming Groups covering areas including lamb, beef, poultry and eggs, cheese and potatoes.
