TUCKED AWAY in a sleepy corner of north Hampshire, where residents live in thatched cottages and spend their days fishing in the river Test, is “Branch 360 of Waitrose” – the codename for an extraordinary, 4,000-acre country estate owned by the supermarket chain.

In the idyllic outpost of Leckford, about an hour from its headquarters in Bracknell, Berkshire, Waitrose operates a farm that supplies 27 tonnes of cup mushrooms and 5m litres of milk each week to its shelves, as well as flour, apples, honey and eggs.

It is a huge operation – with more than 1,000 friesian cattle, 12,000 colombian blacktail hens, an apple orchard and a mushroom farm, which is the sole supplier of white mushrooms to Waitrose.

But Leckford, which has been owned by the John Lewis Partnership, the parent group of Waitrose, since 1946, is not only a provider of farm produce – but a source of practical lessons on the constantly evolving relationships between supermarkets and suppliers.

John Spedan Lewis, son of the John Lewis who opened the group’s flagship London store on Oxford Street, bequeathed the estate to the company’s workers as a rural retreat.

Writing in the Gazette, the group’s in-house magazine, on May 3, 1930, a year after privately buying the estate, Spedan Lewis said: “At first we did not think that it [Leckford] would be of much importance to the partnership. We expected that it would enable us to send to London at moderate prices a certain amount of first-rate farm produce and to offer some of the leaders of the partnership a certain amount of good fishing and shooting.

“However, it began to occur to me that we might find that great advantages can be derived from coupling an estate of this kind with the London branches of the partnership, just as individual wealthy families draw in their London home supplies from an estate in the country and that such expenditure from my private resources, as I might make upon such an estate of my own, might serve the partnership as well as those of myself and my own family.”

The wisdom of Spedan Lewis has grown more obvious as time has passed.

Workers at the John Lewis Partnership – known as partners because they own the business through a unique and experimental form of workplace socialism – can still enjoy sub-sidised visits to the Leckford estate, where they can swim, play tennis and fish.

But since being formally amalgamated into Waitrose five years ago, the farm has emerged as a nerve centre that helps the supermarket chain to understand the challenges faced by British farmers. Such insights are invaluable at a time when supermarket/ supplier relationshipshave come under scrutiny from regulators at the Competition Commission.

Two of Waitrose’s competitors, Tesco and Asda, have been forced to hand over hundreds of thousands of e-mails exchanged with their suppliers this summer as part of an investigation into this highly charged relationship.

“It helps us to understand at a very granular level the crippling pressures farmers face on food production costs,” said Mark Price, the managing director of Waitrose.

The farm and the estate, which employs more than 180 people, will turn over about £10m this year. But Price said that even though the company is farming 4,000 acres of prime Hampshire land, he feels it will still be a struggle to break even this year.

He points to the crops damaged by summer downpours and to milk production that fell because cattle feed had fewer nutrients. Last year the farm made a small profit, but Price cannot recall a year when every division of the farm made money.

“It gives us a real perspective on how farmers are struggling to make a living,” he said. “It helps to mark us out as having some credibility with our suppliers. It makes sure we are not just sitting at a desk in an ivory tower, saying how can we improve our margins by 0.4% when we are looking at contracts.”

Iain Dalton, general manager at Leckford, said that hundreds of Waitrose staff visit the farm each year. Buyers are given tours of the estate and managers share their monthly profit-and-loss accounts for each segment of the Leckford farm.

Dalton said this helps to educate the buyers on the economics of farming and the challenges it faces. “This is not a toy farm. This isn’t tokenism,” he said.

Price added: “It gives our buyers confidence about the prices that we charge and the prices that we pay.”

The farm also gives Waitrose a real appreciation of how much investment is needed to produce good-quality food and drink and how long it takes to pay back that investment. At Leckford the dairy farm has just been expanded, but poor milk production this summer means that it will inevitably take longer to generate a return on the outlay.

“Our whole DNA is about trying to create long-term relationships with suppliers which are mutually beneficial. We know there will be good times and we know there will be bad, so we try to pledge that we will support farmers through the difficult times,” said Price.

Farming is so weather-dependent it can be extremely difficult to predict performance.

Dalton points out that in 2004 Leckford enjoyed a bumper apple crop. But the following year most of the crop was damaged by a hailstorm. This summer, the Leckford apples escaped hail damage but Waitrose suppliers in Kent were hit – and now the supermarket has pledged to sell their produce – labelled as hail-damaged.

Price has switched £2m of the Waitrose advertising budget from a campaign about the quality of its beef to one supporting British farmers.

“We try to look at how we can help on a farm-by-farm and area-by-area basis. It came out recently that one supermarket wouldn’t take a batch of carrots because they didn’t look nice –I don’t think that is supportive.

“Some of our competitors are very single-mindedly focused on price. But unless we all start thinking about where our food comes from and buy from British farmers, they will continue to struggle,” said Price.

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