Sweeter relationship making progress

Is the “new” relationship between British Sugar and growers starting to bear fruit? The announcement of a 2012 contract price of £27.53/t, nearly £4/t higher than for the current crop, suggests the new contract formula has reacted to changing circumstances, while the deal on crown tare hints at real progress.

British Sugar will hope the changes, which also include a 2.5% rise in contract tonnage on every contract and the opportunity to buy into a three-year entitlement for industrial beet, are enough to quell the anger caused by a dreadful harvest campaign, and, for many, an inadequate quota price for the current season.

That price highlighted the dangers of setting a price when contract offers are made, nine months before planting and over a year before the crop is harvested. After the price was announced wheat prices shot up, helping to make the price look out of kilter.

The same could, of course, happen to the 2012 price, which has risen on the back of increased costs (£1/t), higher wheat price (£2/t) and a favourable exchange rate (£1/t), William Martin, chairman of the NFU’s sugar board, said.

“But growers gave us a clear message when negotiating the formula they wanted certainty and to know the price at contracting. If you have a fixed price you can look clever or stupid depending on what happens, but our view is it remains good to know.”

Changing when the price is calculated will not be changed, when the formula is reviewed this season, but the reference period that fixes the wheat price and exchange rate could be tweaked, Mr Martin said. “At the moment it is fixed on a two-week period in June, but it probably should be a longer reference period, so the price isn’t so vulnerable to spikes.”

Some lessons do appear to have been learned from the last campaign. All factories in 2011 will be opened by mid-September, and a commitment to debate opening dates with growers in the future. “It is recognition that British Sugar need to take farmers with them, and not be dictatorial.”

But the biggest breakthrough for growers is the agreement over crown tares. British Sugar will from this harvest campaign will deduct a flat rate 6.77% for crown tares rather than the manual deduction based on sampling. All beet material delivered in excess of the 6.77% factor will be paid at the full beet price.

The decision follows trial work that identified a 0.185% drop in sugar content when whole beet are sampled. That has been allowed for in the fixed tare adjustment to ensure the beet payment is not reduced by the change.

“This is the single best bit of news for growers,” Mr Martin said. “Previously, growers were delivering something to the factory, which British Sugar would make sugar out of, but would not be paid for.

“It meant growers would top harder, but if they can now adjust how they harvest beet and deliver more of the root, they could deliver and get paid for up to 5% more beet.”

The extension of the British Sugar haulage scheme to all four factories means all growers have the choice over whether to let British Sugar to collect their beet.

All haulage firms had the opportunity to tender for the work, said Gino De Jaegher, managing director of British Sugar. “It is not our desire to drive any haulier out of business. We’re interested in driving efficiency and will make our selection based on the right price for the right service.”

British Sugar 2012 contract

* £27.53/t for quota beet

* Contract tonnage increased by 2.5%

* Extra 500,000t available to supply bioethanol plant

* Bioethanol beet priced at £26.50/t

* Bioethanol entitlement for three years

* Permits for industrial beet deliveries biased to later in the season

* No price decided for non-contract surplus beet

Changes for 2011 harvest

* End of manual crowning

* Fixed crown tare of 6.77% applied

* British Sugar voluntary haulage scheme expanded to all factories

* All factories opening by mid-September

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