Growers call for action on beet price formula

A mass meeting of growers is needed to support a drive to review the “fundamentally flawed” sugar beet pricing model, says a leading arable consultant.

British Sugar needed to pay at least £37/t to persuade growers to stick with the crop for 2014, said Charles Whitaker of Brown & Co.

The grower meeting is part of a six-point plan produced by Mr Whitaker (see right) to achieve a fair price focusing on realistic yields and rents, competing crop prices and changes to late delivery bonuses, all reflecting the risk to growers.

Competing crops – including maize for AD plants – were a real and increasing threat to the sugar beet acreage, especially when the damage of late campaigns and challenging seasons were accounted for, said Mr Whitaker.

Six-point beet action plan

  • Mass meeting early May seeking grower mandate for 2014 NFU price position
  • Yield component of price model to be based on past three years’ actual average yield -c63t/ha – not the 68.56t/ha imposed in 2010
  • Overhead cost component of price model to use realistic FBT rents of £200/acre, which British Sugar and others are paying for beet land
  • Wheat price element upper limit of £150/t to be scrapped
  • Replace euro:sterling calculator with fixed £5/t uplift as agreed in 2010 – euro must move beyond 90p to have positive effect under existing model
  • Late-delivery bonus to reward growers adequately

“There is huge ill-feeling about where we have got ourselves with beet. The 2014 pricing cannot be another year when £40m-50m of grower return is pushed across to the processor,” he said.

Sugar beet contract negotiations are carried out by the NFU and British Sugar under the four-year inter-professional agreement (IPA), with prices announced annually, usually at the Cereals Event (12-13 June).

Prices are set according to a formula and while the 2014 crop is the final one scheduled to be priced under the current formula, that formula must change for 2014 to maintain beet tonnage, said Mr Whitaker.

NFU sugar beet chairman William Martin agreed that the formula had got out of step with the market in some respects – rents needed addressing and the upper limit on wheat prices was not necessary. However, he said that at the two-year mid-term review of the IPA in 2012, British Sugar had chosen not to make the amendments the NFU had sought.

“British Sugar said it was getting all the beet it wanted grown. We will see whether that remains the case,” said Mr Martin.

He said the committee was talking to a lot of growers, but there were no plans for a mass meeting in May at this stage. “Just because we’re not in open negotiations [with British Sugar], don’t assume we’re doing nothing. I think they are listening.”

If a fair price was not on offer, Mr Whitaker wanted to see growers refusing to sign contracts for 2014. He also called for British Sugar to compensate growers for the “derisory” 2013 contract price. Those who deliver their full contracted tonnage entitlement of 2013 crop will be paid £28.01/t including the completion bonus announced on 6 March.

A British Sugar spokesperson said the company recognised it had been a particularly tough year for growers. “We are actively engaging with the NFU and growers to understand their concerns regarding the competitiveness of sugar beet compared with the alternative crops in 2014. The next IPA will be agreed between now and next spring ready for contracting of the 2015 crop.

“We do understand that some growers feel the current structure of the agreement is not working for them and we are listening to their concerns. We want to ensure that the agreement works for our growers and are already working closely with the NFU and individual growers to shape the new agreement.”

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