Tesco aims to boost organic food sales to £1bn by 2006

Tesco announced plans to "bring organic food to the masses" yesterday with a target to grow its organic sales to £1bn within five years. The supermarket chain said it would be introducing hundreds of new organic products and cutting the price of many existing lines.

Tesco's organic sales currently stand at around £200m which puts it second behind J Sainsbury.

The announcement came just a day after the Government said it would be asking the four major supermarkets to sign up to a new code of conduct to govern their relationships with suppliers. The code follows the Competition Commission investigation into the sector last year.

Tesco said it would not provide any financial assistance to farmers to help them convert to organic methods. This disappointed the National Farmers Union which said farmers could not be expected to "go it alone" and bear the full cost of transferring to organic farming.

Ben Gill, president of the NFU, said: "This is a great opportunity for British farmers. However, they will need support from others, including the Government, if more farms are to convert to organic production."

Tesco said: "We are not putting any money into funding conversion directly. But in the past farmers have found that they have converted and then found the market for the product wasn't there. We are giving a commitment to make sure it is." The company said it had put £500,000 into a research project at Newcastle University which is looking at the best organic farming techniques.

Paul Smiddy, food retail analyst at Credit Lyonnais, said the timing of Tesco's announcement was questionable. "It is a surprisingly large number they are talking about. But it has to be seen in the context of the food industry at the moment with the code of conduct being announced and Tesco wanting to be seen to be supporting British agriculture," he said.

Tesco has grown its organic food sales from just £30m when it was first introduced in 1997 to £200m now. If organic sales hit £1bn by 2006 it will be equivalent to 5 per cent of Tesco's food sales. Sainsbury's expects to have organic food sales of £235m by the end of the current financial year. Waitrose has also been pushing organic products.

However, other supermarkets have encountered consumer resistance. Iceland has pulled out of organic produce completely after a failed attempt last year to only stock organic vegetables.

Terry Leahy, Tesco's chief executive, said: "Our organic sales have been strong across the board but now customers from all walks of life are telling us that they want to buy more organic food."