Sainsbury's commits £5bn to farming in push for long-term supply stability

Sainsbury’s is pouring £5 billion into British and Irish farming, expanding long-term contracts in a bid to stabilise a sector under growing strain.

The supermarket plans to extend its partnership model to more than 2,500 farms by 2027. That would create one of the UK’s largest networks of multi-year supply agreements, covering fresh produce, dairy, meat and poultry, and securing 3.1 million tonnes of own-brand food.

The announcement comes as confidence in the sector continues to fall. Government research shows just 33% of farmers feel positive about their future, highlighting the pressure from rising costs, inheritance tax changes, climate challenges and global instability.

Sainsbury’s said it wants to provide greater certainty through longer-term contracts, with 60% of its own-brand fresh food suppliers expected to be on agreements lasting more than five years by the end of 2026.

The retailer is also moving into soft fruit, a category traditionally dominated by short-term, seasonal deals. New five-year contracts have been agreed with growers including Angus Soft Fruit, Chambers, Soft Fruits Direct, J.O. Sims and Dyson Farming, bringing 62 British berry farms into longer-term arrangements.

It said the shift would give growers the confidence to invest in sustainability and innovation, while helping to secure domestic supply.

Sainsbury’s began developing long-term supply deals nearly two decades ago, starting with dairy farmers in 2007. Its cost of production model links payments to real-world inputs such as fuel, feed and fertiliser, allowing farmers to manage volatility more effectively.

The approach has since expanded into eggs, poultry and other categories, supporting investment in areas such as lower-carbon beef and new production methods.

Chief executive Simon Roberts said the expansion builds on a model already proven in the sector.

“Good food is something people depend on every day. In uncertain times our focus is on keeping food great value for customers while giving farmers the reassurance and certainty they need to plan ahead,” he said.

He added that when farmers know “what we’ll buy, at what price and for how long, they can plan, invest and keep producing the great tasting, responsibly sourced British food our customers trust”.

Roberts said expanding the agreements across meat, dairy, fruit and vegetables would help “secure the future of good food for all of us”.

Existing partnerships are already delivering results. A deal with Monaghan Mushrooms in the Republic of Ireland has enabled Sainsbury’s to become the first UK supermarket to offer conventional mushrooms grown without peat.

Farmers say the longer-term approach is critical as pressures intensify. Charlie Burgoyne, a dairy farmer in West Sussex who has supplied Sainsbury’s for more than 15 years, said the sector is facing “incredibly challenging times”.

“These are incredibly challenging times for farmers, with the impacts of climate change, rising input costs and global instability creating real uncertainty,” he said.

“Multi year agreements, underpinned by a fair cost of production model, give us the stability and confidence we need to plan ahead, invest for the future and sustain our farm for generations to come.”

However, questions remain over how widely the benefits will be felt, particularly among smaller and more vulnerable farms not yet covered by such agreements.

The move reflects a broader shift among major retailers towards longer-term supply deals, as pressure grows to secure domestic food production in an increasingly volatile global market.