Associated British Foods (ABF) said today that revenues across its sugar business were 20% lower during the third quarter of its financial year.

But the group, which owns the British Sugar beet processing business in the UK ? which includes a sugar factory in Bury St Edmunds ? and the associated Silver Spoon brand, said the beet crop for the 2014-15 season was making “very good progress”.

The update came as part of a interim management statement in which ABF said group-wide revenues for the 16 weeks to June 21 were up 3% on a constant currency basis, with its Primark budget fashion chain leading the way with growth of 22%.

The decline in sugar revenues was driven by substantially lower sugar prices, weaker European Union sales volumes and lower sugar production in north China.

ABF said the trend reflected the end of EU sugar quotas in 2017, although the speed of adjustment had been faster than expected.

“The UK sugar campaign in 2013-14 benefited from the mild winter as the company produced 1.32million tonnes of sugar compared with 1.15m tonnes the previous year, with beet yield per hectare 12% ahead. Record operating performances were achieved at all plants,” it added.

“The new crop for the 2014-15 season has made very good progress. The beet price payable to growers for this crop was agreed in summer 2013, at a substantial increase over the price for this year, and at a cost of some £30m.

“Discussions are under way with the National Farmers Union to agree future beet prices beyond the 2014-15 season that will ensure a sustainable UK beet sugar industry reflective of the new commercial environment for EU sugar.”

In grocery, revenues were 5% lower compared with last year at constant exchange rates, with the majority of the decline caused by lost contracts and lower UK sugar pricing at Silver Spoon.

This was offset by market share growth for Kingsmill bread in the face of challenging trading conditions, while Twinings Ovaltine continued its recent record of profit and sales momentum.

ABF said the latest growth at Primark brought its growth for the first 40 weeks of the financial year to 17% and reflected the impact of warmer weather compared with a year ago in March and April and continued strong trading over the following two months.

Selling space increased by 1m sq ft on a year earlier to take the Primark estate to 275 stores covering 10m sq ft in locations across Europe.