Growers face tough negotiations after losses at ABF sugar
© GNP Sugar beet growers face difficult contract negotiations this spring after Associated British Foods (ABF) reported sustained losses in its sugar division, driven by lower selling prices in Europe and higher production costs.
A trading update issued by ABF, the parent company to British Sugar, showed ABF Sugar making significant operating losses which are forecast to persist throughout 2026.
ABF chief executive George Weston said: “In Sugar, the results were below our expectations and, given the current market conditions, we are more cautious on the outlook.”
See also: UK sugar beet growers offered forward contract option
Overall, sugar sales declined by 9% for the 24 weeks ended 28 February 2026, according to the group’s interim results announcement.
It stated: “At this stage of the year, we have limited visibility of the size and quality of the 2026-27 beet crop in Europe, but early indications are that the European sugar market will remain in surplus in 2027.
“Given the current market environment, including a lack of a visible inflection point in European sugar prices, there is no evidence yet of a recovery in our sugar business in 2027.”
The group reports that the processing of the 2025-26 UK beet crop has completed and sugar production totalled roughly 1m tonnes, putting it below year-earlier levels due to a lower overall acreage.
Speaking at the recent NFU council meeting, NFU Sugar Board chairman Kit Papworth said: “Their European sugar business has lost £27m.
“This isn’t a surprise to us, they have been telling us for some time, but that’s obviously unsustainable for them and we expect a tough negotiation this year.”
Price negotiations for future sugar beet contracts are due to begin between NFU Sugar and British Sugar next week.
ABF restructure
ABF has decided to split its existing business into two separate entities, one focusing on food and one on retail.
The food segment, known as FoodCo, will retain the Associated British Foods name and accounts for roughly £9.8bn of the firm’s revenue.
Michael McLintock, chairman of ABF, said: “The board has now completed its in-depth review of the structure of ABF and has concluded that a demerger of Primark is the best way to maximise long-term returns for shareholders, reflecting Primark’s scale today and the need for a better understanding of the food business.
“The opportunities ahead for both Primark and FoodCo are considerable and the board firmly believes that each will thrive as an independent entity.”
ABF chief executive George Weston added: “For our food business, the separation will enable greater understanding of the breadth and strength of our differentiated portfolio and its long-term growth opportunities as the only FTSE100 pure play food producer.”
