Sainsbury's
Using long-term farming agreements to strengthen supply stability
Climate-related procurement risk: Extreme weather, rising production costs, climate-related crop and livestock disruption, supplier financial pressure and food price volatility
Solution pathway: Long-term supplier agreements, committed investment, domestic sourcing support and multi-year supplier partnerships
Business type: Large grocery retailer
Sector: Food retail, fresh produce, dairy, meat, fish and poultry procurement
Geography: United Kingdom and Ireland
In practice
Food retailers depend on reliable supplier relationships to keep shelves stocked, maintain quality and manage price volatility. This is becoming harder as farmers face more frequent extreme weather, rising input costs, changing growing conditions and wider market uncertainty. If suppliers cannot plan, invest or absorb shocks, retailers may face reduced availability, higher prices and weaker supplier relationships.
Sainsbury’s has responded by expanding long-term agreements with farmers and growers across key categories including fresh produce, dairy, meat, fish and poultry. The retailer has announced more than £5 billion of committed investment into UK and Irish agriculture, with more than 2,500 farms expected to be backed by long-term contracts by 2027.
The approach is designed to give suppliers more confidence about future demand. This matters because farmers often need to make investment decisions well before products reach the market, including investments in infrastructure, productivity, climate resilience, animal welfare, water management, technology and capacity. Long-term agreements can reduce the uncertainty that makes these investments harder.
For Sainsbury’s, the benefit is greater supply security and a more stable procurement base. By building longer-term commercial relationships with suppliers, the retailer can improve visibility over future availability, reduce exposure to short-term market volatility and maintain access to key products even when climate, cost or trade conditions are uncertain.
This is especially relevant in food categories where climate disruption can quickly affect availability and prices. Fresh produce, dairy, meat and poultry suppliers may face weather-related production losses, higher energy and feed costs, water stress or changing disease pressures. Longer-term agreements do not remove these risks, but they can create a more stable framework for managing them together.
The case is useful for this section because it shows how procurement resilience can be built through contract structure. Rather than relying only on spot purchasing or short-term negotiations, businesses can use longer-term supplier relationships to support investment, reduce uncertainty and keep supply chains more stable.
Why this example was selected
This case study was curated because Sainsbury’s long-term farming agreements have been externally reported as a major procurement response to climate, cost and market volatility. Reuters reported that Sainsbury’s committed more than £5 billion to support over 2,500 UK farms through long-term contracts by 2027, linking the move to climate change, rising costs and global uncertainty.
The case also has wider sector recognition. The National Farmers’ Union welcomed the investment, noting that long-term contracts can give farmers and growers the certainty needed to invest in future infrastructure. Sainsbury’s own reporting says that the expanded model will help secure millions of tonnes of fresh food through long-term agreements, strengthening stability and resilience across the supply chain.
The example is useful for the Business Knowledge Hub because it shows a direct procurement adaptation: using longer contracts and committed purchasing relationships to keep suppliers viable and reduce instability in availability and prices.
