Compensation is crucial to keep competitive edge

Maximising the compensation paid to sugar beet growers in the first four years of reform is top priority, according to NFU chief sugar beet adviser Helen Kirkman.

Addressing a “breakout” session on “Driving positive reform”, she said she was pleased that DEFRA secretary Margaret Beckett had recognised the need to treat sugar beet growers differently.

“We need to make sure British growers are not placed at a competitive disadvantage to their Continental competitors,” she said.

Earlier at the NFU’s annual conference the secretary of state had said sugar beet compensation would still be moved towards the flat-rate single farm payment that will apply to all farmers from 2012.

“But Tim Bennett has convinced me that there is a case to at least examine a different rate of progression over the transitional 2007-2009 years,” she said.

DEFRA had therefore launched a new consultation seeking the best ways to achieve this.

One option would see some of the sugar beet money allocated on the same basis as the single farm payment.

For example in 2007, 30% would be flat-rate and 70% would be linked to historic production.

But another chunk would be allocated purely as “sugar entitlement”.

This sugar-specific aid would be available in 2007, 2008 and 2009, after which beet growers would receive their compensation on the same basis as everyone else.

In total, the UK sugar industry is set to receive almost £500m over the next seven years.

The consultation suggests that, for the historic element, payments should be linked to 2005/06 contract tonnage.

While welcoming the principle behind the allocations, NFU sugar beet vice-chairman Nick Wells said it was important to have as much “front loading” as possible.

The NFU would be studying the figures closely and consulting with its members in the coming weeks.

The other main priority was to produce a new inter-professional agreement (IPA) with British Sugar for the newly reformed regime.

One of the NFU’s successes during the reform talks in Brussels last year was to have written into the regulations that sugar industries would still have to negotiate with producer bodies to determine price and contract terms.

In this context, Ms Kirkman urged British Sugar to pay above the official minimum EU beet price in future.

“The minimum beet price is not sustainable,” she said.

“We will not be growing beet at that price.”