British Sugar offers growers additional 20% over contract

News that British Sugar has increased its requirement for sugar beet next year by 20% and is giving growers the chance to produce more shouldn’t have come as a big surprise.

Just like other commodities, the world prices of sugar and bioethanol have risen sharply in the past few months, creating opportunities that didn’t exist just 12 months ago.

In simple terms, the recent market rally means that British Sugar can afford to pay more for surplus beet, explains the company’s Robin Limb, thus providing growers with what he describes as a genuine profit-share opportunity.

“Surplus, or non-quota, beet has to be marketed outside the UK or go into bioethanol,” he says. “As the export and biofuels markets are buoyant at the moment, we’ve been able to increase the price we can pay for non-quota beet.”

In practice, it will allow growers to produce a further 20% in excess of their contract. The price agreed between British Sugar and the NFU is £21/t, with transport and a late-delivery allowance being paid on top.

“That detail is important. It’s not an all-in price,” stresses Mr Limb. “So it’s only £2.60/t short of the contract price and very favourable compared with this season’s price for surplus beet of £13/t.”

He believes it will be attractive to growers who are achieving either average or above-average yields. “Certainly, they’ll be able to make money at that level.”

It should also appeal to growers who weren’t able to secure additional tonnage in the summer, he adds. “And the other potential group of beneficiaries are those who are falling short of the performance rule and are unlikely to produce 95% of their contract. They have a chance to boost their area and get back on track.”

Mr Limb accepts that there will be some farms that physically can’t grow any more.

“There’s always the option to lease out some of your contract tonnage and then maintain your area through this initiative.”

An extension to the deadline on the leasing and transfer scheme means that growers have until 31 January 2011 to make the necessary arrangements, he adds.

Anyone thinking of taking up the offer and adjusting their crop area should tell British Sugar as soon as possible, advises Mr Limb. “We will have to make provision for seed, so the sooner we know the better. Either ring the helpdesk or speak to your area manager.”