1. Risk Sharing Sainsbury’s Sustainable Calf Scheme Phil Nash Sainsbury’s Dairy Development Group (SDDG) Farmer 09.03.2011

2. Background to SDDG Established 2007 343 dairy farmers selected from 8 UK milk fields Steering Group committee meet with Sainsbury’s regularly to manage the scheme 4 key ‘ Workstreams’ 1.Herd Health & Welfare 2.Collaborative Working (Calf & cull cow schemes) 3.Business improvement 4.Environment Energy

3. Calf Scheme  Established November 2009, to secure a market for SDDG B&W bull calves  In partnership with Sainsbury’s beef supplier  Unit at Tetbury (other units in South West and Midlands)  2 week old calves collected direct from farm (as per rearing protocol)  Calf price decoupled from the market price to cover cost of production  Agreed a forward price contract with rearing/ finishing unit.

4. Rearing Units for SDDG calves from farms under TB restriction TB Units  Unit 1 established February 2010 – Cirencester, Gloucestershire ‘TB Exempt’ Unit’: calves collected from a farm under TB restriction & will remain on this rearing/ finishing unit till slaughter  Unit 2 established November 2010 – Tiverton, Devon ‘TB Quarantine Unit’ – calves collected from a farm under TB restriction and have 2 TB tests on the rearing unit to gain a TB free status. These calves can then be moved to another finishing unit.  Calf price same as those from un-restricted herds  Only scheme to pay a sustainable price for calves from TB restricted farms  800 SDDG calves reared through these 2 units.

5. Were does the risk lie? Farmer -They are guaranteed a market for their calf that is sustainable (calf price covers the cost of rearing & includes a margin) Processor -Normally buy cattle based on the market price. The high feed price currently challenging but the supply chain is guaranteed and the production standards are known Sainsbury's -Ring fenced & secured part of their beef supply however currently high feed prices are making it more expensive, but taking the long term view