The 2016 beet price was justified during negotiations as comparable, at gross margin level at least, to other crops. However at a net margin level the contract price of £20.30/t will mean the crop will break even at best, says Andersons director Nick Blake.
What happens in succeeding years remains to be seen. “Some growers have decided to continue growing sugar beet for another year, possibly to have the chance to be part of any reorganisation of the industry in 2016-17 when quotas disappear, the details of which we await with great anticipation.
“There seems every prospect that growers could be disappointed with the outcome, in terms of price and structure, but for some businesses it will be worth waiting another year to find out. The weakness of current commodity prices has played into the hands of British Sugar.”
Timetable for BPS rollout
- January/February – Farmers and landowners register for BPS
- February – Registered applicants should check land details including land use and cover
- March – Sort out entitlements and eligibility
- April/May – Submit BPS claim
Growers began to understand their options for beet growing in future, and put forward their own suggestions for a post-quota contract mechanism at an NFU Sugar/British Sugar meeting held on 13 November.
NFU sugar board chairman William Martin noted that existing growers would have first refusal to grow, so it could be business as usual for some.
Sugar stocks are understood to be at their highest ever level, and sugar consumption has become the latest dietary headline, says Mr Blake.
Despite recent signs of a recovery in the EU sugar price, it remains higher than world values, maintaining pressure on UK production. “Given this outlook, growers need to include in their assessment of the crop’s future on their holdings whether factory closure(s) will result.”