IN WHAT industry leaders have described as 'significant step forward' for Scotland's livestock sector, retail chain Aldi has unveiled a new beef cross dairy supply chain model.

The new model is integrated from farm to retailer, and offers a mutually agreed guaranteed price per kilogram for Scotch Aberdeen Angus Beef for each 12-month period, raising hopes of a long-term, economically sustainable solution for farmers, processors and retailers, which can be progressively scaled up in years to come.

Led by Aldi, in partnership with Scotbeef, G Barbour and Company, Harbro and Genus ABS, the new procurement chain is believed to be the first end-to-end contracted integrated scheme of its kind in Scotland, with a farmer, processor and retailer working together collaboratively.

Aldi’s new farmer partner, Richard Barbour, of G Barbour and Co, beef farmers based in Crocketford, Dumfries and Galloway, said: “This is a positive development for our industry and we’re proud to be working with a forward-thinking supermarket like Aldi to develop an innovative new model for the procurement of Scotch Aberdeen Angus beef.

“Over recent years the Scottish Beef industry has experienced severe price pressures, with many cutting livestock numbers or even exiting the industry altogether. By Aldi guaranteeing a fixed price per kilogram for the beef we produce each year, it will allow us to forecast further into the future and provide more certainty going forward," said Mr Barbour.

The Aldi model is based upon Aberdeen Angus beef cross dairy calves. Mr Barbour will buy A-A sired calves from a select group of local dairy farmers, which will then remain on his farm for the rearing, growing and finishing stages of beef production, before being sent to Scotbeef’s abattoir at Bridge of Allan.

Aldi Scotland's group buying director, Graham Nicolson, said: “Aldi is the largest retailer for Scottish Origin Beef and we’re consistently the strongest supporter of the domestic Scottish Red Meat industry as demonstrated by our performance in NFUS Shelf Watch during 2019. We believe this is the right thing to do to support the industry in the long term and is the next evolution of our local Fresh Meat sourcing strategy.

“By bringing together partners at each stage in the supply of Scotch A-A Beef, we are confident our Beef Cross Dairy Supply Chain model will create a product of consistent high quality.

“We’re excited to be working with the Barbour family to trial the model this year and hope to be able to roll it out more widely across the Scottish business over the next five years.”

NFU Scotland president Andrew McCornick commented: “This is a significant step forward for the industry, and one that shows the clear potential to add value to beef from the dairy herd.

“It is an excellent example of vertical integration, where beef from Scottish dairy farms will reach Aldi’s shelves with full production traceability and all parts of the chain, from calf producer to retailer, adding value to the product," said Mr McCornick.

“Bred using A-A bulls selected for performance and eating quality, the beef produced from these calves is geared towards customer satisfaction and will complement the beef supply from the suckler herd to ensure we are always able to buy locally sourced, locally reared beef in store. Given the focus on our sector, here is a climate friendly supply chain with very low food miles involved."

Milk committee chairman, John Smith, added: “From a Scottish dairy perspective, the continued move towards using sexed semen in the dairy herd coupled to the opportunity to work collaboratively with real supply chain solutions right here in Scotland must be welcomed and encouraged.”

However, Institute of Auctioneers and Appraisers in Scotland executive director Neil Wilson was less impressed: "The auction market system is the only transparent way to secure the best price for our livestock producers, benefitting the entire rural economy.

“It works well for everyone in the chain. It provides choice and flexibility for all parties, as well as offering the most up-to-date transparent market pricing. Selling through the ring also avoids the risks of fixed contracts which can be inflexible, especially for producers, and result in a dilution of business flexibility, market price and competitiveness alongside the danger of losing negotiating power in the supply chain.

"Our members are committed to supporting Scotland's farmers in the fairest possible way. We would encourage producers, processors and supermarkets to work with us to ensure the market is open and vibrant.”