UK: Beet price deal stalled

Sugar beet growing in a field

Sugar beet growing in a field - Credit: Eastern Daily Press © 2013

Beet growers have urged British Sugar to recognise the real costs and risks of growing the crop after one of the most difficult campaigns for years.

There was annoyance that the processor did not seem to appreciate the risk of damage to soil and structure and how much it will cost to put right as the price proposals were announced at Cereals 2013 last week.

British Sugar’s director of agriculture, Colm Mackay, said the 2014 price would be £30.67 per tonne - an increase of £3 on the agreed price formula. In summary, late delivery payments in 2014 compared to last year will be over 40% higher and it will pay for the frost insurance scheme. This years’s beet price was £1.50 tonne higher - worth about £12million to growers.

For 2014, if growers delivered over the full campaign, the average paid including late delivery bonus would be £31.15 tonne. Industrial beet, so-called ICE contracts, would be paid the same as contract tonnage entitlement, and a guaranteed price for surplus beet of at least £25 tonne.

He recognised the extent of crop volatility. “A lot of that volatility has been driven by extreme weather events and alternative crop prices at levels which have not been seen before. In 2010, there were early frost issues.

“On the flip side in the following crop in 2011 we had an all-time record and record factory performances. It just shows when we do get it right, we can really do it as a combined industry. Last year, 2012, it was a challenging campaign, specially for harvesting and delivery.” he added.

British Sugar recognised growers’ concerns about investment and its ability to process the crop, especially during the last campaign. “Since 2005, we have invested £200m in our factories. We plan to invest £50m this coming season at our factories –that’s approaching twice the level that we invested in the previous season.”

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On a price setting mechanism, he said that it had to “be competitive and it needs to drive margins that are competitive with other crops. A form of pricing mechanism is still the best way to set the price – we need to get it right and it needs to be flexible.”

“We proposed an increase in price compared with June last year of £35m. When those price increases are coupled with the increases in capital investment that is a £60m response compared with June last year to growers’ concerns.”

“The pricing mechanism needs to be reviewed as part of a wider review of the whole IPA to do it justice. We need to get it right and have in place for 2015 and for regime reform after that. We believe it needs to be part of that wider review.”

Many growers were irritated at linking capital spend and a proposed higher beet price. It was echoed by west Norfolk farmer Jim Scarratt, of Feltwell, who told British Sugar’s managing director, Richard Pike, that a £34 tonne beet price would more fairly reflect growing costs. Although he grows about 14,000 tonnes, options to grow maize for AD plants might be more attractive, he said.

A leading East Anglian grower of almost 1,500 acres of beet said that four of the last 12 campaigns had been hit by adverse weather. While farmers had to deal with the weather, he said that the proposed price did not recognise the real cost and risk of repairing damage to soil, structure and farm tracks.

The National Farmers’ Union’s sugar board, which represents all 3,500 growers, has not accepted the offer.

An open meeting for growers will be held at the East of England showground, Peterborough, tomorrow at 9.30am.

A group of Dutch growers, who by chance, heard the price proposals, expressed surprise. Their base price for 16% beet from their co-operative will be E68 (£58) although that includes a dividend of E20 (£17) tonne. On their silt land in northern Holland, they typically achieved sugar yields of 13.5t per ha and gross yields of an average 80t ha.