East Anglia: UK beet industry ‘could compete against cheapest producer’ - claim

Beet farmers and monopoly processor British Sugar could compete against the world’s cheapest producer if the industry was given time to invest for the future, said leading East Anglian grower Robert Law.

The home-grown industry has been transformed over the past 30 years, he told a National Farmers’ Union briefing at Cereals 2012 at Boothby Graffoe, near Lincoln.

“In 1981, the UK produced 1.5 million tonnes of sugar on 240,000 hectares (593,000 acres) in 13 factories. In the past campaign we produced 1.3 million tonnes on less than 115,000 ha (284,165 acres) in four factories,” said Mr Law, who is vice-chairman of the NFU’s sugar board.

Six years ago the European Commission reformed the sugar regime. “In 2006, the EU was the second largest exporter of sugar and over the course of the past five or six years, it has been one of the biggest importers. But these imports been have very unreliable and prices have soared. A lot of the sugar which was expected to be imported into Europe didn’t arrive,” he added.

Mr Law, who farms near Royston and grows beet for the Bury St Edmunds factory, said that Europe wanted to scrap production quotas from 2015. “We’re saying 2020. Why do we need to delay? We want to build up the UK capacity to grow sugar and further increase yields, and efficiency.”

Growers and processors have made massive efficiency and productivity gains since 2006, which has involved closure of two factories and concentrating investment on the world’s largest refinery at Wissington, near Downham Market. British Sugar’s other three factories at Bury St Edmunds, Cantley, near Great Yarmouth, and Newark in Nottinghamshire, have also shared in �9.5m of investment to improve reliability and performance in the past two years.

Mr Law said that in 2002, UK production costs were three times more than Brazil. “This year, our production costs are only 1.3 times that of Brazil. Our aim by 2020 is to close that gap to... so our crop production costs are the same as Brazil,” he added.

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He also announced details of the NFU’s frost insurance scheme for growers, which could probably cost about the same as the current research and development levy or about 13p a tonne.

“Because the policy is covering 50pc of losses, it will still be in the growers’ interest to deliver as much of the crop as possible,” he added.

Further details of the proposals will be sent to all 3,750 growers with the offer document early next week.

Mr Law said that the latest contract price, �26.51 per adjusted tonne, had probably been about �2 lower because of the impact of currency and especially the euro.

Further, an enhanced late delivery allowance would be introduced. The payment formula, which could pay 50pc more than storage losses between January 8 and February 28 from the 2013 crop, will be based on new trials to be carried out by the British Beet Research Organisation. Historically, it has been calculated at 0.13pc of yield per day stored. So, for example, the 2013 campaign beet price for beet delivered on Boxing Day would be �26.72 tonne but delivered on February 10 would be �28.52 tonne.

For the 2013 crop, the late delivery bonus has been enhanced. Payments will be based on new BBRO trials, starting this campaign. The trials providing the data were carried out about nine years ago. Since then, changing to topping and newer varieties may have made a difference to losses in a well-managed clamp.

Mr Law, who urged growers to return offers quickly, said British Sugar would be paying �25.51 for so-called “industrial use” or the ICE tonnage.

He said that the impact of currency could further reduce the value of the transport allowance, which would depend on the euro’s value during September. On his 9,000 tonne contract, at 35 miles from the factory, his transport allowance would be cut by �6,750 this year.

He urged growers to consider whether to become part of British Sugar’s harvest and haulage scheme, which was now handling about 10 to 15pc of all beet grown.