Beet price offer shrouded in uncertainty

Next year’s sugar beet price is to increase to about £26/t, but with the final value dependent on currency fluctuations between now and the summer, growers have been left feeling uncertain about the crop’s future.

British Sugar announced last week that the 2009 contract price would be £26.10/t, based on an exchange rate of £0.80/euro and a wheat price of £150/t. Additional late delivery bonus and transport allowance payments were likely to total about £3.80/t.

“Currency is the main driver of the price, so it is subject to the vagaries of the pound against the euro, but we don’t expect any big changes,” BS’s Robin Limb said. “Wheat prices would also have to drop significantly to see any big change in the price, and again, we don’t expect this to happen.” Beet contract prices moved +/- 50p/t for every £10/t movement in the wheat price, he said.

Sugar beet sunset farm generic

Sunset or sunrise for sugar beet? Are you willing to grow the crop at £26/t?

But NFU sugar board chairman William Martin said the failure to guarantee a contract price had left growers feeling uncertain. “There’s no point pretending, £26/t is not a bad offer. For some it’s not enough, but others will be tempted. But if there’s a chance £26/t could become £23/t, it makes a big difference.”

The NFU was in negotiations with BS about a way of managing that currency risk for growers, he said.

Tom Mott, who grows 100ha (250 acres) of sugar beet near Ely, Cambridgeshire, described the 2009 contract offer as “awful”. “Everyone’s costs are different and it’s difficult to know where to draw the line, but I reckon we need at least £27/t just to break even.”

Nitrogen fertiliser quotes for next season were already hitting £400/t, fuel prices could reach 70p/litre by the autumn and land rents had risen 30%, he said. It also costs him about £10,000 a year to repair damage to farm roads and soil structure after sugar beet. “We’ll probably give it one more year to see where the price goes. If British Sugar doesn’t pull something out of the bag, we may well stop growing beet.”

No need to rush

Arable Farmer Focus writer Robert Law advised growers considering beet not to rush into signing contracts and to calculate costings carefully. “For some, £26/t works, for others it doesn’t. The key thing is that you need to be getting the yield.”

Mr Law reckoned crops had to average 30t/acre to make it stack up financially. “18-20t/acre is not a runner anymore. We got 32t/acre on land near Royston last year, so it works for us here, but on our other farm near Newark, things are a lot more marginal.”

Transport was also a big factor influencing profitability and increasing haulage costs continued to get passed on to growers, Mr Martin noted. “What British Sugar pays just doesn’t cover the cost.”

See the next edition of Crops (31 May) for Robert Law’s views on the future of sugar beet.