Tesco will reward more than 400 British farmers with new financial incentives for hitting environmental and animal welfare targets, in a move worth up to £9.5m in its first year.
The initiative will reward farmers across Tesco’s dairy, beef, lamb and pig sustainable farming groups for meeting key sustainability metrics, while also providing support for baseline data collection on soil, water and biodiversity.
From September, 260 dairy farmers in the Tesco Sustainable Dairy Group (TSDG), supplying liquid milk through Müller UK, will be eligible for payments of up to an additional 2.5p per litre if targets on emissions reduction, animal health, feed conversion efficiency and genetic improvements are achieved.
The retailer estimates that more than £9.5 million could be paid out in the scheme’s first year. Farmers will also take part in a baselining exercise over the next 12 months to establish targets for soil, water and biodiversity improvements.
The move follows Tesco’s launch of the Future Dairy Partnership with Müller UK and Arla last year, designed to trial innovations to reduce emissions, protect nature and improve animal welfare.
Similar schemes will also be rolled out across Tesco’s other farming groups. In the Tesco Sustainable Lamb Group (TSLG), up to 160 farmers will receive rewards for planting herbal leys.
Members of the Tesco Sustainable Pig Group (TSPG) will be offered payments linked to improvements in animal welfare, biodiversity, soil health and emissions reduction. Incentive payments are already in place for farmers in the Tesco Sustainable Beef Group (TSBG).
Ashwin Prasad, Tesco UK CEO, said the retailer is acting on priorities set out by farmers in its recent strategy.
“Earlier this year, as part of our farmer-led Greenprint for UK Farming Report, we published a set of recommendations for the government and industry aimed at ensuring the UK agriculture sector is equipped to transition to a low carbon future.”
He noted that farmers had highlighted incentive schemes as a crucial tool to meet shared sustainability goals, prompting Tesco to link payments to measurable progress across its Sustainable Farming Groups.
“We’re pleased to be acting on these recommendations with the roll-out of sustainability-linked incentives for a number of our Sustainable Farming Groups,” he said, stressing that the approach is designed to secure both commercial resilience and environmental gains.
“These incentives will play a crucial role in ensuring our farmers remain economically and environmentally sustainable for the long-term.”
Rob Hutchison, CEO of Müller Milk & Ingredients, added: “We are delighted to collaborate with Tesco to identify solutions for farmers that will not only drive high standards of animal welfare and reductions in environmental impact, but also create the financial conditions which supports future planning for their business.
"We want to build a better future for the British dairy sector, and programmes like this, will make a real positive impact.”
