British Sugar is to offer growers a guaranteed minimum price for 2009 contracts in a bid to boost growers’ confidence over future returns from the crop.
Two options have been outlined. A guaranteed minimum price of £24 per adjusted tonne, with potential for upwards movements in price depending on currency and wheat price movements. The second option is a guaranteed minimum price of £25/ adjusted tonne, fixed.
The offers have been based on parent company Associated British Foods taking a financial hedge on currency markets, so are not open-ended and are only open to contracts received by Friday 11 July, BS’s Robin Limb explained. “We understand that more certainty is needed, especially with recent increases in input costs. On the other hand, there is still a significant upside to beet price, and growers would like to maintain this potential.”
Growers who did not take up one of the offers, would not loose out, but would have more uncertainty about what the final price would be, he said. For those growers that had already returned contracts, the minimum price option (Option1) would be put in place, unless growers request Option 2.
British Sugar also encouraged any existing, or new, growers wanting to take up additional tonnage to come forward as soon as possible. “About 70% of the returned contracts to date are requesting additional tonnage, which we are now confirming,” Mr Limb added.