Our draft farm accounts for last year show that, despite respectable yields of cereals and oilseed rape, gross income from those crops was down nearly 25% against budget.
We grew and harvested more than we’d expected and sold a fair percentage forward, while reasonable prices ruled. But the collapse of world prices seriously eroded our income.
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However, those same accounts suggest that gross returns for last year’s sugar beet crop will be 25% up against budget.
I use the word “suggest” because the last lorry loads have just gone to the factory and some estimation is involved. But we are confident that, because of ideal weather, we have produced considerably more tonnes a hectare than ever before, as have most beet growers.
“The short-term future of sugar beet is a nightmare.”
The net result is that our bottom line is close to budget and we shall survive for another year. But for farmers who did not grow sugar beet or have some other income less vulnerable to market volatility, the implications of low returns for combinable crops are worrying. Indeed, my bank manager tells me he is being kept very busy visiting such people to see if he can raise their overdrafts.
Regular readers may be surprised to see me praising sugar beet. Many of my past comments on the crop have deplored the damage harvesting it can do to soil structure and to the potential yield of crops that follow. They are the reasons many farmers have stopped growing beet, combined with dissatisfaction at the prices paid for roots by British Sugar, which failed to recognise these problems over many years.
Well-attended meetings of militant sugar beet growers were held to reinforce NFU negotiators’ determination to get better prices. Some farmers declared they would not grow for less than £35/t, but the best that could be negotiated was £31.67/t, paid for the first time for the 2014 crop. It was better than prices in the £20s/t but not enough for all and they exited the crop. Some may now be thinking they acted prematurely.
But “prematurely” is the right word, because the short-term future of sugar beet is a nightmare.Quotas are to be abandoned in a couple of years, according to an edict from the EU. So the area grown in each EU country will fluctuate according to growers’ whim and/or the price paid the year before. But even before that happens, a build-up of sugar stocks in cane producers such as Brazil has created huge surpluses for which there is a limited market.
This led British Sugar to demand a 20% cut in the UK quota for 2015 and a reduction from the current price of £31.67/t to £24/t. If growers produce more than their quota, as this year, British Sugar will pay a pittance for it which will hardly cover the cost of lifting and delivering roots to a factory. NFU negotiators, reviewing the reality of the world surplus, decided they had no option but to agree to the processors’ demands. So next year, after this year’s bonanza, looks as if it will produce a thumping loss for growers.
Not that British Sugar has escaped unscathed. They have silos full of sugar at every factory and have rented farmers’ barns to store much more that they can’t sell at a profit. Last week they announced the closure of two sugar factories in China which they bought a few years ago.
Sugar may have saved some of us this year, but it could drag us down next. Just like milk, cereals and, for others, oil.
David Richardson farms about 400ha of arable land near Norwich in Norfolk in partnership with his wife Lorna and his son Rob.