22 August 2001

Dreaming of a sugar beet free world

Marie Skinner wonders if selling off her sugar beet quota would make her better off

IRATHER fancied selling my sugar beet quota when the Outgoers Scheme was first introduced. It wasnt that I dont like sugar beet – I do. It forms an ideal break crop for a light land farm, I was just being tempted by the thought of making lots of money at a time when arable production is barely profitable.

As the end of our farm year approaches, it is heartbreaking to see how small the financial return for the past years work, especially when I remember the horrors of a wet autumn, followed by an even wetter spring. Looking back, it was more demanding than a normal year, requiring more effort but producing poorer results than usual.

Against this background, the idea of making money without hard work is appealing. Its a skill Ive been unsuccessful at acquiring. Ive watched with envy the farmers whove managed to gain planning permission on derelict barns, which they sell unconverted for huge sums to incoming commuters. Or others, who do even better, when farmland is reclassified as development land, enabling the farmer to sell out for vast and unimagined figures.

Theres always a possibility NFU Mutual will be unable to fight off a future takeover bid and that my insurance policies will result in a windfall gain. But it seems unlikely, so my best bet for stress-free cash must be the sale of my sugar beet quota.

When the Outgoers Scheme was first announced, I registered as a potential seller. I worked on the principle that there would be some growers prepared to pay uneconomically high prices to gain contracted tonnage. When rhizomania trading of quota was first introduced, some trade took place at ridiculously high prices. I thought it could happen again, especially as brokers were talking of prices of £50 to £70/t when the scheme began.

Working out how to spend my £100,000 plus from selling 2,000t of quota, I was dreaming of my new, sugar beet free world, With the loss of beet, the farm could become all cereal, with set-aside area increased to provide the break crop. By running a minimum labour, simple system of cereal production, fixed costs could be slashed. The sugar beet income would be lost but interest on the money invested from the quota sale, reduced costs and a larger IACS cheque would go a long way towards compensating for the change.

Perhaps the strongest reason for selling would be to take advantage of the one-off ability to convert the historical right to grow sugar beet into a capital asset. British Sugar has made no commitment to turn trading of contract tonnage into an annual event so. It is a now or never opportunity.

However, since the early optimism about quota prices, the Inland Revenue has declared that quota sale will not be viewed as a capital asset but as trading income. That means higher tax bills and no chance of using roll-over relief to reduce tax liabilities.

The reality is that very few, if any, trading took place at the £50+ prices. At the first auction of quota, two-thirds remained unsold, with sales only ensured for quota around the £25/t level. After the taxman has taken his chunk, the seller could easily be left with under £18/t.

At those levels I have no choice. I shall forget the winter holidays in the sun, the leisurely Christmas without work pressures, the lack of abuse from residential neighbours who object violently to sugar beet lorries using their road and the inevitable problems of mud on the road.

Sugar beet production will have to continue and an easier life seems unlikely – unless of course I find rhizomania on our farm. If that unfortunate event should occur, I could gain an income by hiring out my beet quota, year after year, and I wouldnt have to worry about weed beet ever again.