Sugar beet growers face lower prices and reduced crop area as British Sugar contends with falling commodity markets and high sugar stocks.
The processing giant has unveiled a sugar beet price of £24/t for the 2015-16 crop – some 24% lower than this year’s beet price of £31.67/t.
At the same time, the company has announced a one-off “contract holiday” so farmers can opt out of growing the crop in 2015 before growing it again in 2016.
This will only be available for a limited tonnage of up to 20% of the national crop. Growers who want to take advantage of the contract holiday must do so by 26 August.
If the area is still oversubscribed after growers have returned contracts, British Sugar says it will consider a one-off across-the-board temporary cut in contract for 2015.
To further reduce the likelihood of surplus beet being produced, growers will only need to deliver 90% of their contract tonnage, rather than the usual 95%.
At the same time, British Sugar has agreed to reduce the area of beet it grows by 50% in 2015.
The terms of the 2015-16 sugar beet contract offer were agreed following months of detailed discussions between British Sugar and the NFU.
Letters outlining the deal were due to reach growers on Wednesday (23 July).
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Discussions had taken place against a backdrop of commodity prices falling significantly from the peak levels of 12 months ago, says the letter.
“Following the larger-than-anticipated crop last campaign and very good prospects for the crop in the ground, sugar stock levels have reached an unprecedented high,” the letter adds.
“As a result, we need to reduce the area of planting required in 2015.”
The sector is facing further pressure with the end of sugar quotas due in 2017.
British Sugar agriculture director Colm McKay said the package demonstrated a joint commitment by the company and the NFU to work together to deal with the challenges the industry is facing.
The two sides were also exploring whether a beet pricing option that is linked to the sugar market place could be available to growers in the future.
“We aim to have completed this work by the end of the year,” said Mr McKay.
NFU Sugar chairman William Martin said the agreement had to be seen in the context of lower commodity prices for other arable crops, too.
“Everything has gone against us,” he told Farmers Weekly. “Markets for everything are lower – markets for alternative crops have been falling by the day.”
Mr Martin added: “If there are people who feel this isn’t for them, they can take a break from growing sugar beet without cutting ties with the crop completely.”