Sugar beet growers will get the full amount of compensation owed to them for this season’s price cuts and will not have to put any of the money into the general single farm payment pot.

DEFRA secretary David Miliband made the announcement in the House of Commons late last week.

“I have decided to simplify to the maximum possible extent the arrangements for the incorporation into the single payment scheme of additional support arising from last November’s landmark EU sugar reform,” he said.

“In practice, that means the £52m concerned will be added entirely to entitlements held by sugar beet producers, rather than some of the funds being used to increase the flat-rate value of all entitlements.”

The NFU described the decision as “pragmatic” and the only sensible thing to do given the over-riding need to get the single payment system working smoothly.

“This decision recognises the realities of the mess the government has got itself into and should be welcomed, not only by the sugar sector, but by the whole industry,” it said.

DEFRA had indicated that the 2006 payment would be made on the same basis as for everyone else, with 85% of the money allocated according to a growers’ historic production, and the rest going into the “flat rate” payment pot.

The change of heart follows the debacle of the 2005 SFP payout, and a prediction by Mr Miliband that the 2006 SFP process would still be “very challenging”.

DEFRA says it will make a subsequent announcement on how 2007 compensation is to be paid to sugar beet growers, though it is likely it will then start shifting beet growers’ money over to the flat rate part of the SFP.