By Andrew Shirley
BRITISH Sugar has nipped a proposed beet quota leasing market in the bud.
Although in some circumstances quota is already leasable as part of the Rhizomania Stewardship Scheme, other “grey” leasing arrangements have always been frowned upon by BS.
In light of the recently announced sugar beet outgoers scheme, it had been hoped that BS would be more flexible in its interpretation of contract management rules, as leasing would establish a bottom in a trading market struggling to find its level.
But, in a joint statement issued with the NFU on Tuesday, the sugar firm said: “In the past there have been significant issues with growers sub-letting the actual growing of beet to other farmers while taking no part in the actual production and delivery.
“This was not and is not acceptable.”
The price of quota has stabilised over the week with most traders reporting prices below 45/t.
Last week DCFM was selling at up to 55/t, now Mr Clark says most deals are being struck at close to 40/t.
“Some buyers who were planning to sell at 50/t are now considering buying if the price falls much further.”
“Just 10 could make the difference between buying and selling,” confirms Bidwells Rob Cumine, who has developed a model to determine the value of sugar beet for specific farm enterprises over a period of time.
“This will enable farmers to assess the true cost of a sugar beet contract to their business before making the decision to buy or sell.”
The service is free to all farmers.
Confusion still surrounds the tax implications of quota trading.
It had been expected that any transactions would be treated under Capital Gains Tax, but Jeremy Moody of the Central Association of Agricultural Valuers warns otherwise:
“The latest signs (from the Inland Revenue) are that quota could fall under Income Tax.
“Contracts may also not qualify for roll-over relief.”
According to Grant Thorntons Nick Kemp a decision from the IR is expected within the week.
“The revenue understands the need for a quick judgement and we hope to have confirmation soon.”
- CAAV-endorsed information service Beet-Talk is organising a series of seminars for growers to examine the issues arising from the outgoers scheme. Further details are available on 01594-836128