British Sugar’s latest price offer unlikely to break deadlock

British Sugar has put what it describes as a final 2010 contract beet price offer to the NFU ahead of the union’s key meeting with growers, according to a source close to Farmers Weekly.

It is understood that the offer will be presented at next Wednesday’s grower meeting, which was called after negotiations between the two parties collapsed.

But the NFU’s reaction suggests BS’s latest move is unlikely to end the deadlock.

The minimum contract beet price is said to be £26 per adjusted tonne. The offer includes a wheat price escalator, although this would not kick in until the feed wheat price hit £130/t*, and would then only add a further £1 to the base price.

If the wheat price rose to £150/t or more then growers would receive £28/t.

All contract beet would be covered, including temporary contract beet, most of which fuels British Sugar’s bioethanol plant at Wissington.

Transport and late delivery allowances would be added to the base price, according to the source.

The offer is effectively not negotiable – if it is rejected and growers push for a higher price, then BS has reportedly stated it would not seek any additional tonnage in 2010, as bioethanol production would become uneconomic.

That extra tonnage amounted to 900,000t last year, or 14% of the crop. Without it, new growers with no quota would not be able to sow any sugar beet next spring.

Lee Abbey, NFU sugar adviser, said the union’s “position has not changed”. The reported offer was below last year’s £27/t, which included a £1 transport premium, he said.

Mr Abbey refused to discuss actual figures but added: “British Sugar has made an offer, but the NFU will not accept a price cut.”

Growers would be informed of the offer at next week’s meeting and would be asked to give feedback, but negotiations might have move on by then, he added.

* Escalator based on the average daily LIFFE futures price for February 2010. At close of play 26 August it was worth £104/t.

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