Farmers harvesting bumper sugar beet yields this autumn face an unwanted headache after being told to grow a smaller crop for less money in 2015.
British Sugar has slashed by 9% the amount of beet it wants farmers to grow next season. The processing giant blamed an exceptional growing season and limitations on the amount of sugar it can sell due to European production quotas and export restrictions.
High sugar stocks remain “way in excess of those needed to service our customers,” said a British Sugar email sent to growers. “It is therefore necessary to implement a 9% across the board cut to all of the tonnage offered.”
The 9% reduction means the 2015 contract tonnage has now been cut by a total of 20%. It follows a British Sugar appeal for farmers to take a contract “holiday” in 2015. That plea had already resulted in farmers representing 11% of the national crop agreeing not to grow beet next year.
The reduction will hit beet returns hard. This year’s bumper crop is worth £31.67/t. But an already confirmed price cut next year means most growers will receive just £24/t for growing 91% of their regular tonnage in 2015. Any surplus beet next season will be worth less than £5/t.
Lincolnshire beet grower and contractor George Putterill said he was already considering his options. “We are going to have to rethink our rotation and we will lose some contracting work, too. Combined with the price reduction, we think people will be less likely to use our services.”
The difficult global sugar market saw shares in British Sugar parent company ABF fall 56p to £26.21 on Friday (12 September) – the biggest fall of the day. Berenberg analyst James Targett said low sugar prices for the coming year threatened to wipe out profits in the EU sugar industry.
NFU Sugar chief adviser Ruth Digby said growers should look closely at seed orders and how the tonnage reduction would affect their farm business. “Growers need to look at cropping plans and avoid growing any surplus beet. At less than £5/t, it isn’t going to make a return.”
Meanwhile, this autumn’s beet yields remain promising following the start of the 2014 harvest earlier this month – although some growers report that sugar content could be better. Processing is now under way at all four British Sugar factories across eastern England.