Sugar beet growers will be able to fix their own beet prices rather than accept a fixed amount, in a new pricing platform developed by NFU Sugar with support from British Sugar.
The platform will be tested by a pilot group of growers next year and will allow them and British Sugar to price beet independently of each other for the first time, allowing growers to lock in prices when it is attractive to them.
This is part of a year-long pilot programme, being delivered by sugar trader Czarnikow, with the intention to then roll it out more widely across contracts with Britain’s 3,000-plus sugar beet growers.
Those growers involved in the pilot will have the option to transfer up to 10% of their contracted beet tonnage from the traditional fixed-price contract to the variable-priced contact, which will be linked to the sugar futures market.
As the programme grows, Czarnikow expects larger percentages of the crop having the flexibility to opt out of the fixed price and take advantage of new futures-based contracts.
NFU Sugar board chairman Michael Sly said the project comes in response to calls from growers for more control over sugar beet prices, which have edged downwards in the last few seasons.
“This can be a win-win for the industry. It will give growers flexibility to lock in attractive prices at a time to suit them and take the opportunity and risk the market offers them into their own hands,” he added.
This comes at a time when this season’s sugar beet harvest is set to see sugar production fall nearly 25%, due to the severe effect on yields from aphid-spread virus yellows disease.
British Sugar says white sugar production is forecast at 900,000 tonnes, some 24.4% down on last season’s 1.19m tonnes, while beet yields are also forecast down 25% compared with a five-year average of 75t/ha.