Beet efficiency higher if quota trading allowed

18 July 1997

Beet efficiency higher if quota trading allowed

EFFICIENCY in the UKs sugar beet industry would be much improved if a proper system for trading quotas was introduced.

According to a new report from Cambridge Universitys Agricultural Economics Unit, differences in the cost of production among sugar beet growers amount to £15/t, with the best achieving £21/t compared with £36/t for the worst. (This is mainly the result of yield differences rather than farm size.)

"If some producers are able to grow beet at a lower cost than others, simple economics tells us there are gains to be had by transferring quota between farms," says the report.

Author Alan Renwick dismisses as "politically unacceptable" the idea that quotas be reallocated by British Sugar. And even if it was, this would not result in the greatest cost savings. "The lowest cost producers may not necessarily be those preferred by British Sugar," he says. Instead, it would seek to give quota to producers with high beet purity, low tare and those regularly meeting contract.

But, assuming quota could move freely from high cost to the low cost producers, Dr Renwick estimates that, nationally, as much as 1.68m tonnes could be transferred, with an average saving of £10/t, equivalent to £16.5m, or a 7% saving for the industry as a whole.

On the grounds that producers would only lease out their quota if offered more than their net margin from growing the crop themselves, while those leasing in would only pay up to their net margin, Dr Renwick also estimates a lease value of £12.50/t.

lEconomics of the UK Sugar Beet Industry, Agricultural Economics Unit, Department of Land Economy, 19 Silver Street, Cambs CB3 9EP (01223-337166). &#42

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