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Beet quota prices prove a tough call

By Andrew Shirley

CONFUSION surrounds the value of sugar beet quota after last weeks announcement by British Sugar that contracts can now be traded on the open market until 15 October.

Duncan Clark, of Boston broker DCFM, claims the firm is averaging sales of about 3000t a day at 50-55/t.

But Simon Mountjoy, of East Anglian agent Brown & Co, says most of the firms deals have been pegged at 40-49/t. “There is much more supply than there is demand.”

Derby-based trader Ian Potter reckons there has been too little movement to put an accurate price on the market. “We have traded 160t at 54/t, but the scheme is still in its infancy.”

Paul Bee of British Sugar agrees and dismisses many of the brokers claims as “hot air”. He says that so far few actual transfer forms have been received by the company.

“I know some agents want to talk up the market and may have made provisional deals but nothing can be finalised without the seal of approval from BS.”

He also scotches speculation that the scheme may be run again in the future.

“There are definitely no plans to repeat the offer. Any growers who are not operating their contracts correctly should seriously think about selling now.”

Producers who are considering buying or selling quota should consider all the options before taking the plunge, warns accountant Grant Thornton.

“It is important to look at gross margins before making a decision,” says the firms Henry Mullins, adding that there many be tax and tenancy implications.

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Beet quota prices prove a tough call

3 August 2001

Beet quota prices prove a tough call

By Andrew Shirley

CONFUSION surrounds the value of sugar beet quota after last weeks announcement by British Sugar that contracts can now be traded on the open market until Oct 15.

Duncan Clark, of Boston broker DCFM, claims the firm is averaging sales of about 3000t a day at £50-£55/t. "Most of our clients would not sell for a penny less than £50/t."

But Simon Mountjoy, of East Anglian agent Brown & Co, says most of the firms deals have been pegged at £40-£49/t. "There is much more supply than there is demand."

Derby-based trader Ian Potter reckons there has been too little movement to put an accurate price on the market. "We have traded 160t at £54/t, but the scheme is still in its infancy."

Paul Bee of British Sugar agrees and dismisses many of the brokers claims as "hot air". He says that so far few actual transfer forms have been received by the company.

"I know some agents want to talk up the market and may have made provisional deals but nothing can be finalised without the seal of approval from BS."

He also scotches speculation that the scheme may be run again in the future. "There are definitely no plans to repeat the offer. Any growers who are not operating their contracts correctly should seriously think about selling now."

Producers who are considering buying or selling quota should consider all the options before taking the plunge, warns accountant Grant Thornton. "It is important to look at gross margins before making a decision," says the firms Henry Mullins.

"Sugar beet has been a relatively profitable crop, so a cut in costs must be achieved if selling is to be worthwhile." He adds that there may be tax and tenancy implications.

"Many tenancy agreements prohibit the sale of quota, even if it is in the name of the producer not the landlord. In terms of tax, sugar beet quota has no base cost, so capital gains tax will be payable on 100% of any sale proceeds. But any CGT can be offset against current year trading losses." &#42

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