7 June 1996

BS will look for mobility in contract negotiations

For the first time in many years, the NFU and British Sugar are about to start wide-ranging negotiations on beet contract management. Suzie Horne reports

FUNDAMENTAL changes to the way contracts are awarded and administered could result from the exchanges, and may even lead to a new Inter-Professional Agreement.

Talks start on June 24 and both parties are cautious about the prospects for success. That they are talking is progress in itself, after a difficult year in which the factory saw issue dominated grower/processor communications. Neither party will reveal the full agenda, but it is clear that contract mobility is an important item.

Monopoly processor British Sugar wants more flexibility and is keen that references to beet contracts and beet tonnage replace the more familiar term of beet quota to avoid comparison or confusion with freely tradeable quota operating in other sectors. The only current quota is the UK national sugar quota, which BS has a duty to fill by processing enough beet from contracted growers.

Neither party sees an open market in beet tonnage as an option. But BS claims the current arrangements hamper development and progress.

Minimal circulation

"At present we have minimal circulation and mobility of contracts," says agricultural director Chris Carter. But he rules out sweeping changes which might allow contracts to be awarded and removed at will by BS. "There is no question of that."

Contracts to new growers, though, are entirely at the discretion of BS under the existing system.

All aspects of contract management are up for discussion, says Mr Carter, who maintains the industry badly needs movement and helpful change. "Discussions will be completely open. Any changes introduced will be after lengthy and careful consultation and in a very responsible way."

He will not confirm that the current formula governing whether growers keep their full contract tonnage from year to year will be discussed but it is likely to be an important element. Tightening up or otherwise altering this formula is one way to provide tonnage for redistribution, particularly from growers judged to be underperforming.

At present, tonnage is retained by growers if their contracts are filled in two of the previous three years on a rolling basis. This formula normally claws back about 5000t a year. But after two drought years, 20,000-25,000t will be removed from growers this season. That is still less than 0.25% of the total annual output of about 8m tonnes of beet.

Any contract returning to BS for other reasons, say through retirement, is rarely reallocated, because the industry is becoming more efficient at filling the national sugar quota from fewer tonnes of beet. Mr Carter sees this as a freeze on the industry. "It would be nice to be able to allocate some of this, if it can move the industry forward." But he will not be drawn on how it might be done.

The position of so-called "non-producers" will also be on the agenda, raising technical, legal and taxation issues.

Filling quota in Worcs last season. Responsibility for husbandry is likely to be debated in this months discussions between British Sugar and the NFU.