NFU Sugar and British Sugar have agreed terms for both a one-year and three-year sugar beet contract for the 2020/21 crop and beyond.
A dispute between the two groups had postponed the announcement, which usually comes during the summer, and put growers in the difficult position of making cropping decisions before knowing what it would be worth.
The issue was said to surround the terms of the new three-year agreement, with NFU Sugar stating that the deal failed to recognise rising costs and risks faced by farmers, though the board now appears satisfied.
A one-year contract will be offered for 2020 at a contract price of £19.60/t – up from £19.07/t in 2018, with no crown tare reduction (6.61% taken off every tonne of sugar beet delivered) and based on the current sugar content payment scale.
This is equivalent to a price paid of £20.99/t on a crowned basis.
A three-year contract will be offered for 2020-22 at a price of £20.45/t, with no crown tare reduction.
This is equivalent to a price paid on a crowned basis of £21.90/t in year one and an equivalent £21.18/t in years two and three.
The three-year prices reflect the change to the sugar scale and no crown deduction in 2021 that was agreed last year.
Both contracts will offer a bonus price for growers, which triggers if the EU-reference price for white sugar reaches a certain value.
For the one-year contract, if the reference price reaches €375/t (£332/t), growers will receive a 15% share of the price above that point.
For the three-year contract, if the price reaches €400/t (£355/t), growers will receive a 25% share of the price above that point.
A maximum of 65% of the total national contracted volume will be available on three-year deals in any combination, on a first come, first served basis.
All contracts will be available to all growers and any grower on an existing three-year deal can transfer to the 2020-22 option for a full or partial term.
Market bonuses will be paid in two instalments, with the first paid as soon as beet volumes are finalised post-campaign.
In the event that British Sugar no longer feeds prices into the EU average sugar price, an agreed alternative market bonus mechanism will apply to ensure growers share any Brexit-related increase in UK sugar prices.
No Brexit compromises
Michael Sly, NFU Sugar board chairman, said it is important that a price has been agreed that recognises the risks and costs associated with growing sugar beet.
“With these new contracts, growers will receive a greater benefit from any uplift in sugar prices than in current deals, and our agreement ensures that these bonuses will not be compromised by Brexit,” he said.
“We are committed to improving transparency in the supply chain and ensuring growers are paid fairly for their produce. The removal of the 0.02% price reductions in measured sugar content on beet tested demonstrates that.”
Colm McKay, British Sugar agriculture director, said the three-year contracts were delivered following grower demand and both contracts benefit from market bonus triggers.