British Sugar‘s pricing structure for the 2008 sugar beet crop was “insulting” and growers should consider not growing the crop, particularly if they average 62.5t/ha (25t/acre) or less, the Norfolk Farming Conference heard.

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Delegates were also told a further 6-10% cut in quota might be needed to hit the European Commission‘s 6m tonne reduction in sugar production (see More sugar beet quota cuts could be on cards).

Net farm margins presented by Charles Whittaker, agricultural business manager for Brown & Co, suggested sugar beet would be the poorest performing crop in many rotations in 2008. “It is pretty obvious that the beet pricing structure for 2008 doesn’t compete. In fact it is inappropriate why are we talking about £21/t for next year, when we already have £24/t in place for 2009? It’s insulting.”

Growers who consistently averaged less than 62.5t/ha (25t/acre) should be letting someone else grow the crop, or stopping altogether, even at £24/t, he said. “Yes, commodity prices [for other crops] are hugely variable, but beet is consistently poor.

“I vote ‘no’ to growing the crop at £21/t.” He told Farmers Weekly he knew of some individual growers that British Sugar had accepted seed back from because their plans had altered. “There is an opportunity for growers to do that. British Sugar might respond.”

But William Martin, vice-chairman of the NFU‘s sugar board, didn’t believe there would be any increase in prices for 2008, although he recognised almost all growers were not satisfied.

Sugar beet

A bleak future was painted for sugar beet at the Norfolk Farming Conference

But he expected growers to fulfil contracts to supply for 2008, because, as Paul Matthews, a solicitor for Birketts LLP, confirmed to the conference, the contracts were almost certainly binding.

British Sugar had to make a commercial judgement about prices, Mr Martin noted. “It has to pay a higher beet price to make sure its factories are filled. Has it done enough to fill its factories for 2009? The honest answer is: I don’t know they don’t know.”

“What is essential is that if growers believe prices are not enough [for 2009] that they tell British Sugar.”

But he didn’t foresee a mass exodus from the industry in 2009. “I’ve spoken to several growers, and while they say £24/t is not exciting, they do believe they can make a go of it.”

He felt the price was good enough to keep him in beet and he pointed to British Sugar’s world position as a reason to feel confident for the future. British Sugar’s claim to be Europe’s most efficient and innovative sugar company was “probably true”, he added. “It is why they feel confident enough to offer the most attractive price in 2009 for Europe, and one they got a bit stick over from their fellow processors.”

Out of rotation

Farm profitability could be substantially increased by removing sugar beet from the rotation in 2009, Anglia Farmers’ Kit Papworth told the conference, based on his model farm projections.

Switching out of sugar beet in 2009 would see a 21% increase in management profit compared with a 26% decrease in profit compared with 2008 if the crop remained in the rotation, he calculated for the 400ha farm growing 70ha of beet at an average yield of 65t/ha.

Whole farm budget – Model farm figures

 

2007

2008

% increase

Whole-farm gross output

335,140

486,340

45

Total variable costs

117,240

131,202

12

Whole-farm gross margin

217,900

355,138

63

Total fixed costs

321,200

341,726

6

Profit before rent and finance

-103,300

13,402

 

SFP

92,800

92,800

 

Management profit

-10,500

106,201

 

Source: Anglia Farmers

Whole farm budget – Model farm figures

 

2009 (incl beet)

% increase

2009 (no beet)

% increase

Whole-farm gross output

510,920

5

489,830

1

Total variable costs

157,443

20

106,673

-19

Whole-farm gross margin

353,477

0

383,157

8

Total fixed costs

368,176

8

346,870

2

Profit before rent and finance

-14,699

 

36,287

 

SFP

92,800

 

92,800

 

Management profit

78,101

-26

12,9087

21

Source: Anglia Farmers