Farmers have criticised Tesco's plans for a dedicated organic beef producer group on the ground it offers too low a price. Tesco has joined forces with key supplier the Chitty Food Group to create the Organic Beef Farmers Association in a bid to encourage more farmers into organic production and encourage existing producers to expand. Farmers are being offered a guaranteed minimum price for a year and an annual bonus if they hit the specified weight and grade. The NFU praised the move. "We support the move to contractual arrangements," a spokesman said. "Farmers urgently need clear market signals." But industry representatives said the 280p/kg minimum was too low to appeal to farmers and does not reflect the costs of converting a farm to organic production. "I don't think this move will encourage farmers, because their breakeven point is 300p/kg," said Kim Haywood, director of the National Beef Association. "They say they need 340p/kg to keep their heads above water, especially with spiralling feed prices. "The association needs to look at 'cost plus' price to secure enough supply to keep the market satisfied." The Chitty Food Group insisted the actual price paid to farmers could well be higher than 280p/kg depending on the market. "In return we ask farmers to supply at least 60% of any single farm's finished stock to us, through the Association, each year," said sales and marketing director David Price. Tesco and Chitty said they wanted to reduce the widening gap between supply and demand in the wake of Red Meat Industry Forum predictions that organic beef production would double to 21,000 tonnes by the end of the decade."We want to fill all that supply with British cattle, because that's what consumers want," said Tesco agricultural manager Joanna King.

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