13 March 1999

From the farm…

The two-year negotiations between British Sugar and the NFU over the new IPA are beginning to get to Marie Skinner.

British Sugar and the NFU have been negotiating for two years over the new Inter-Professional Agreement and they still cant agree. Failure of negotiations will result in the whole messy dispute going to MAFF arbitration and a reworking of all the old arguments.

It seems crazy that the future basis on which sugar beet is purchased could be decided by outsiders to the industry and not by the two parties that know most about the industry and have most to gain from working together and getting things right.

Allegedly, the IPA dispute is over many issues. These range from BSs desire to control haulage, to payment of quality premia and trading of quota.

All the subjects under discussion are important but they are not the problem. The reason why they have become issues is simply a diversion, to distract attention from the real argument- money.

The NFU feels the growers share of the sugar price has declined over the years and is now too low. It also says that BS exploits its monopoly processor status by not paying for the sugar it extracts from the crowns – even though this sugar becomes part of the 1.144mt UK sugar quota, which is then sold at the full, EU supported price.

BS disagrees. It considers it is justified in buying less A/B beet than before because it has invested in an improved its processing operation. BS has looked at the total price it pays for A/B beet and argues that to pay for the sugar in the crowns would effectively increase the total price paid for quota beet above the price set by the EU.

Unless agreement is reached soon, the dispute will go to arbitration and, like an acrimonious divorce, bring out the worst in both sides. Entrenched positions will be taken, points scored and contentious issues put centre stage. For instance, BS could well argue for all future contracts to be ex-farm, removing all control of transport from growers.

As a grower, I despair of what is happening. How has the sugar industry, blessed with more advantages than any other arable/food industry in the country, got itself in such a potentially destructive situation? Producers and processor should realise how fortunate they are to have a guaranteed market at a guaranteed price for the majority of all that is produced.

Within a few months, politicians will start to review the sugar regime. To survive when the current sugar quota system is attacked by the EU, growers need a committed, efficient, streamlined processor. At the same time, BS needs reliable growers who can produce sugar beet profitably at lower prices. Although, it is the very prospect of declining prices that convinces the NFU it must win more share of the money now, or it never will.

The future will be tough. It is sad that the two bodies working for the same industry with the same long term goals, under trading terms that guarantee profitably for both, are in danger of failing to sort out their own problems internally. Our greatest threat is not each other. It is our competitors from within Europe and the world who can produce at a lower cost of production than the UK achieves.

Useful concessions have been made by both sides. Now, however, neither side wants to compromise further: Both are convinced they are right and both blame the other. If arbitration is the end result, it will be bad news for growers and processor.

At a glance

&#42 POTATO growers will be paying a higher levy this year; the rate is being raised by £1.50 to £36.50/ha. The rate paid by first purchasers also goes up by 1p to 21p/t. The increase is necessary, says the British Potato Council, in order to maintain its income in the face of the falling potato area and reduced levy revenue.

For the past two years the shortfall in revenue has been filled by the BPCs cash reserves. The small increase in levy has been given industry-wide backing, says BPC chief, David Walker.

The organisation has also asked for new legislation which would extend the levy to all potato purchasers in the supply chain. If this is approved, then more levy payers would be gathered into the net and the rate would come down from the proposed 25p/t to 15p/t.

&#42 FANCY buying a potato breeding business? Monsanto has one for sale and wants to hear from you. It will keep PBI Cambridges wheat, barley and oilseeds interests, and chip off the potato breeding programme – the UKs largest; the commercial potato varieties and pre-commercial varieties such as Admiral; and the seed production unit, PBI Fenton, in Perth. Pulse breeding is also likely to finish.

&#42 MEANWHILE could Monsanto itself be up for grabs? The companys shares rose sharply following rumoured preliminary merger talks with DuPont, which is looking to expand its life sciences side. But analysts think the talks will founder, as did Monsantos proposed merger with American Home Products last year, says the FT.

&#42 RETIREMENT relief could save up to £250,000 on business assets of £1m. Farmers reaching 50 before 6 April 2003 could find ways to exploit retirement relief but must act before 6 April this year. After this time the tax exemption will be cut by a fifth each year, say chartered accountants Morison Stoneham.

&#42 TOUGHER pesticide regulations are being planned. All users would be required to hold a certificate of competence, including those born before 1964 who are exempt under the current rules. Dont panic though: if the proposals go through this autumn, pesticide users will have five years grace to get their certificates.

&#42 STERLING has tended to strengthen against the Euro since January and intervention prices are lower than they would have been under the old Green Rate, say Andersons the Farm Business Consultants.

&#42 BASIS is to publish a register of members each year so that only those with up-to-date knowledge are listed. To remain on the register BASIS advisers will have to keep collecting Continuing Professional Development points.

&#42 BEER at 65p a pint could work miracles for East Anglian barley growers. The Miracle Beer Companys home brew uses only the best malting barley for its beer powder which also contains yeast and hops. The products just add water formulation is proving popular and it could boost barley demand in the region by 2,000t a year.

&#42 BAYER has updated its potato seed treatment guide, giving the latest on assessing the need for treatment. Free copies are available from Marian Johnson, Bayer plc, Eastern Way, Bury St Edmunds, IP32 7AH, tel: 01284 763200.

&#42 A GLOBAL glut of vegetable oil is crushing European oilseed and sunflower seed prices. The UK rapeseed price fell by about £50/t from December and world markets are weak. Third country imports are competitive against domestic supplies, aided by exchange rates. South America is expecting a good soyabean crop, with Argentina producing a record sunflower crop, the HGCA reports.

Scottish arable farmers could grow milling oats under buy-back contract instead of spring rape, suggests Dalgety, to remove some of their price uncertainty this year.

&#42 SULPHUR should be applied to the seedbed to get spring oilseed rape off to a good start, says Dalgety. It claims that the crop requires 10kg/ha and that its sulphur prill Onset increases drilling accuracy at low rapeseed rates.

&#42 A NON-GM herbicide-tolerant wheat may be available to seed producers in Canada by the 2001 growing season. This would beat the glyphosate-tolerant wheat expected from Monsanto in 2002, reports The Western Producer. Canada already has canola tolerant to imidazolinone group herbicides manufactured by Cyanamid. The agchem company stresses the gene for wheat imidazolinone resistance was found in winter wheat and is "not a product of biotechnology".

&#42 CYANAMID says its insecticide Contest, a fizzy tablet, gives better control than emulsifiable concentrates. It backs this claim with work from University of Portsmouth professor Martyn Ford showing that formulation alters transfer, distribution and penetration of the dose. In trials Contest left a consistent deposit over 90% of leaf surface, giving 90% control for 12 days compared with five for emulsifiable concentrate.