British Sugar‘s announcement this week that it is to increase the 2009 contract price and haulage allowance, has failed to impress growers and could still see some reduce their tonnage next year.
The two original contract options are to be retained, with the first offering a minimum price of £24 per adjusted tonne, plus a currency and wheat price escalator. Option two is a guaranteed price of £26/t, fixed – up from £25/t. The transport allowance for both options has also been increased by about £1 per adjusted tonne.
“We’re confident it will be enough,” Karl Carter of British Sugar told Farmers Weekly on Wednesday (6 August). “With prices of alternative crops (wheat and oilseed rape) coming back recently, the margin for a 60t/ha beet crop looks much better. [The negotiations] have probably been left a bit later than I would have liked, but in the end, it’s worked in our favour, as alternative crop prices have fallen.”
British Sugar may have increased its 2009 contract price,
but doubts still hang over how many growers will be drilling the crop next spring
But while the latest offer was a step forward, the NFU – which wanted at least £28/t – and growers, said it was still not enough. “It [£26/t] is encouraging, but I don’t believe it represents fair value,” NFU sugar chairman, William Martin said. “There will be a lot of growers for whom it is not enough. But there will also be a proportion who think it makes growing beet worthwhile.”
Cambridgeshire farmer Oliver Walston, who organised a meeting three weeks ago that prompted negotiations to reopen, said he would grow beet next year, albeit reluctantly. “It’s definitely on probabtion. I think 50% of the people at the meeting will cut back significantly on their tonnage, though.”
While Mr Martin welcomed BS’s recognition of increased haulage costs, Sarah Easton, who hosted Mr Walston’s meeting, said it was long overdue and feared it would still not cover the loss many growers were making on haulage. “As soon as hauliers hear there’s more money available for transport, you know what’s going to happen,” she said.
“I’m disappointed with the offer and the NFU. We’d have liked £30/t. There’s no way we’ll grow our whole 3000t tonnage next year it’ll probably be nearer half that, just on the best land, where we can get the yield, and where beet is needed as a break crop.” A local farmer with a 6000t quota was also thinking of halving his amount grown, she said.
Mr Martin said the negotiations this summer had highlighted the need for further change to sugar beet pricing. “Growers want certainty and confidence to plan pricing, in the same way that they can sell other crops forward. Ultimately, we’d like to get to a similar situation for sugar beet, to manage forward exposure.”
* For more grower response to beet prices, see our letters page, p32 or go to the forums.
What happens now?
- New price option forms sent to all growers, regardless of whether they have already returned contracts to British Sugar or the NFU
- Growers have until 5pm on 15 August to return completed forms to British Sugar
- Those wishing to cancel their contract can still do so under the standard terms and conditions