Tesco offers new feed-linked contracts to egg producers
A new tracker contract, backed by Tesco with all of its packers, will insure egg producers against volatile movements in feed costs. As one of Tesco suppliers Noble will be offering this contract as part of their relationship with the country’s biggest supermarket chain.
Noble accepts the tracker contract will not be suitable for everyone but believes that many producers will be interested in protecting against "unforeseen future inflation." Producers who sign up for the new contract, with Noble Foods, will receive 2.5 pence per dozen less for their eggs than other producers, but their egg prices will automatically increase by 0.1 pence for every 50 pence per tonne increase in the price of feed.
Feed market volatility
Tom Hind, group agriculture director of Tesco, said, "Commodity market volatility is a challenge for our customers, for Tesco and our producers. Through developing a mechanism that reflects variable production costs in the prices we pay our egg suppliers, we're better able to manage this risk together.
"This is an important and significant step in strengthening our relationships with producers in order to secure supply and deliver for our customers." He said that, earlier this year, Tesco had launched the Tesco Sustainable Egg Group, which enabled the company to "take these relationships further with our suppliers and farmers" and understand how it could deal with big challenges like volatility. This would ultimately enable it to deliver for its customers.
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