* CEO says Tesco will source "closer to home"
* From July all fresh chickens sold in UK will come from UK
* Focus turns to British-sourced produce
By Alice Baghdjian
BIRMINGHAM, England, Feb 27 (Reuters) - Tesco, the world's third-largest retailer, said it would buy more meat from its home market in Britain and shorten supply chains after the discovery of horsemeat in beef products shook consumer confidence in supermarket sourcing.
Tesco, Britain's biggest retailer, was one of the first grocers to be hit by the horsemeat scandal, which has prompted European governments to demand tougher rules on the sourcing and labelling of meat products.
"Where it's reasonable to do so, we will source from British producers," Tesco Chief Executive Philip Clarke told farmers at the National Farmers Union conference in Birmingham, central England on Wednesday.
Clarke said Tesco would seek more partnerships with British farmers and that from July all fresh chicken sold at Tesco's stores in the United Kingdom would come from British farms.
"We'll move over time to ensure that all of our chicken in all of our products, fresh or frozen, is from the British Isles," he said.
The discovery of horsemeat in some beef products sold by Tesco led to criticism from Prime Minister David Cameron and knocked 480 million pounds ($772.3 million) off its market value on Jan. 16.
Tesco's shares have risen since then, but British supermarkets are trying to reassure rattled consumers that meat products are properly labelled and clearly sourced.
Clarke, who started his career stacking shelves at Tesco, responded to the scandal with a more stringent product testing regime and a pledge to offer customers insight into Tesco's global supply chain.
"We are going to examine all aspects of our supply chain. We'll look at the processes that we use and make sure we can be totally confident in how our products are being sourced," he told farmers.
Clarke said the retailer would establish an independent panel of experts to advise on its supply chain, which would need to be shortened and simplified.
Livestock specialists say that ensuring a chain of quality from farm to table will cost money - particularly at the cheaper, ready-made meal end.
"It does not follow that the measures I am announcing today mean that food needs to become more expensive," Clarke said, contradicting comments he made earlier in the day, when he told BBC's Today radio programme that he hoped but could not promise there would be no price increases.
Clarke had said in a Feb. 21 statement that raising standards "doesn't mean more expensive food".
Environment Secretary Owen Paterson said British suppliers should seize on increased demand for top-quality British products that pass through "rigorous traceability systems".
"This is a fantastic opportunity for British farmers to show their products to the British consumer, because the British consumer has had a horrible shock in recent weeks. There is a clear fraud in the horsemeat scandal," Paterson said.
Farmer Mark Leggott said the beef industry's reputation had suffered from decades of health scares including foot and mouth disease and bovine spongiform encephalopathy (BSE).
But Leggott, who has 25 years of experience on his farm in the eastern English county of Lincolnshire, said the beef industry had stabilised and could be bolstered by a renewed focus on British produce in the wake of the horsemeat scandal.
"We've already jumped through the hoops in this country. We can just go and fill that capacity straight away; we fulfil the criteria already in terms of traceability and provenance," Leggott said in an interview.