Early beet contract trade suggests buyers’ market

Sugar beet contract tonnage has begun trading ahead of the official 11 September start date, in what is shaping into a buyers’ market.

Following the new Inter-Professional Agreement and restructuring deal agreed by British Sugar and the NFU, brokers have been anticipating trading about 1.2m tonnes of contracted tonnage.

Some growers who got out of sugar beet several years ago, or new growers near remaining factories, are
reported to have bought big contracts.

Broker Ian Potter said market prices of £2-£4/t were in line with expectations.

This would be added to the £7-£7.50/t compensation package from BS.

“It’s a bit above what growers can get from British Sugar.

If you have, say, 400t to get rid of and you can get even another £1/t, you would be foolish to sign it off to British Sugar.”

Mr Potter said two farmers, new to sugar beet, had bought 8000t and 10,000t to begin growing.

Duncan Clark of Lincolnshire broker DCFM said trading had begun at £2.50-£3/t, but had weakened slightly to £2.25/t as business had increased.

“At these prices, there is no leasing market and there won’t be unless values rise.”

York or Allscott growers more than 60 miles from Newark, who were unsure whether to sell, had three options, Mr Clark said.

“They can continue to grow on their own farm and deliver into Wissington or Bury St Edmunds’ factories.

But it’s unlikely the allowances in the new Inter-Professional Agreement would meet the haulage costs.”

Alternatively, growers who wanted to retain their contract tonnage might choose to rent land in East Anglia, close to factories.

“But they’ll need to pay a contractor to cultivate, plant, harvest and deliver a crop that is 130 miles away.

It’s just impractical.”

The most attractive option for disenfranchised growers seems to be to sell their contract tonnage on the open market to remaining growers in East Anglia, at a small premium to BS buy-back prices.

But some growers have questioned whether to invest in contracts, preferring to hedge their bets in the hope BS will offload some of the tonnage it garners to growers at a nil value.

“British Sugar has made it abundantly clear it will not subsequently offer that tonnage to growers,” said Mr Clark.

Carl Atkin of farm consultant Bidwells saw little scope for prices to rise.

“There are a lot of people with a lot of tonnage to sell.

It’s very much a buyers’ market.”

The deadline for trading contract tonnage is 6 October.