Sugar beet grower’s compensation for price cuts will be incorporated into the single farm payment based on contract tonnage held by farmers, DEFRA announced this week.

Junior DEFRA minister Lord Rooker said nearly £500m would be included in the SFP over the next seven years. The £52m allocated for this year would add significantly to farmer’s entitlements, he said.

Contracted tonnage entitlement will be the only criterion for the allocation of historic payments.

Growers who leased out their contracted tonnage in 2005 will receive payments based on that amount, but those who leased extra tonnage will not.

Historic payments will be added to sugar growers’ SFP receipts in the 2007-2009 years.

Broker Duncan Clark of Lincolnshire-based DCFM estimated growers’ compensation would equate to about £6.50/t of their contracted tonnage entitlement held in 2005.

From 2010-2012, the compensation would be incorporated within the flat-rate regional payment, Mr Clark said.

NFU sugar board chairman John Hoyles said growers can be sure contract trading will have no impact on their compensation entitlement.

However, there had been no mention of the deficit area premium which Brussels agreed to compensate British farmers for the equivalent area of imported sugar, estimated at €10m a year.

Mr Hoyles said this had been heralded by DEFRA as a “tangible win” for the sugar beet industry.

“We would expect this to be paid entirely to growers in the reference year and seek clarification from DEFRA on this issue,” he said.

DEFRA’s announcement triggered an increase in the amount of sugar beet contract tonnage coming onto the market, according to broker Ian Potter.

Prices have settled between £1.80 and £2/t for Wissington, Bury St Edmunds and Cantley contracts, depending on mileage, while leased quota had a nil value, Mr Potter said.

“But there is significant demand for Newark contract tonnage from the Vale of York. Anyone approaching the 40-50 mile distance can expect to pay about £5/t, with leasing values between £1-2/t,” he said.