As products continue to be pulled from shelves across Europe because of the horsemeat scandal, closer relationships between retailers and their raw materials suppliers are key to preventing similar scandals in the future - and keeping food prices affordable, according to Rabobank.

The Winning Through the Supply Chain report said dedicated supply chains - where retailers, food processors and suppliers entered into long-term contracts and worked more closely - would cut price volatility as well as food safety risks.

It said modern supply chains were typically characterised by weak, short-term relationships. By building closer ties and committing to multi-year contracts, companies would have greater incentive to share insights and react better to risks.

Coffee is one of our key risers as well as one of our fallers this week. Prices of Robusta, stronger and cheaper than Arabica, have risen 7.9% over the past month due to growing demand from emerging markets like Russia and Brazil.

The costlier Arabica bean has fallen 3.4% in price over the past month and is 30.5% lower in price than a year ago. The slump is down to more tepid demand from the US and Europe, where Arabica is more popular. Forecasts for a 9.1% increase in Arabica production for 2012/2013 have also depressed prices.

Durum wheat prices have also dropped sharply month-on-month, by 5.9%. Total EU durum wheat output is expected to rise 2.4% in 2012/2013.

“Closer co-operation will transform the nature of food and agriculture partnerships from transactional ones - centred on chasing price - to a system focused on creating value,” said Rabobank global strategist Justin Sherrard.

The report also said dedicated supply chains would help prevent food safety and quality scandals, such as the recent discovery of horsemeat in burgers and ready meals.

Some companies were starting to build the kind of supply chain relationships it is advocating. The report cited New Zealand meat processor Silver Fern Farms, which has started offering producers three-year supply contracts, instead of typical agreements of up to one year. It said multi-year contracts gave farmers the guarantees to better manage production and improve efficiencies, while giving processors more certainty about prices.

Rabobank also praised Mars for sharing good agricultural practices with cocoa growers and Green Mountain Coffee Roasters for its work providing financial support for grower development projects.

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