Sugar beet is sweet investment

A RAPID uptake of sugar beet contracts and a buoyant market for leased tonnage among growers has proved beet to be a sweet investment for 2010/11.

There had been outrage among some growers in October after British Sugar and NFU Sugar agreed the same sugar beet price for the 2010/11 campaign as last year.

Many growers said the price was unsustainable.

However, British Sugar revealed it has since received 90 per cent of all contracted tonnage, with the rest ‘soon to follow’, and tonnage is being leased for up to £2.50 per tonne between growers.

British Sugar said additional ‘temporary’ tonnage of 800,000 tonnes, which does not qualify for the £1 transport allowance, had also been snapped up by eager growers.

“The figures prove that we have given growers a fair price for the future. We are now making sure all growers that want to, have got their contracts in and we are confident we will get 100 per cent uptake,” said a British Sugar spokesman, after the deadline for contracts passed earlier this month.

He added: “You could argue that the price is actually £2 too high, given quota is being leased for £2 or more.”

Under the 2010/11 agreement, contracted tonnage is worth £26/t with an additional £1 added to the transport allowance fund – like the 2009/10 agreement.

HSBC recently backed up the price agreement when it reported sugar beet would be one of few agricultural commodities where farmgate price would outweigh cost next year. 

Nevertheless, Nick Wells, NFU Sugar vice-chairman, said remuneration would need to increase for a sustainable future for the sector.

“There is a short term acceptance of the price for this year but growers need to be able to look to the long term and invest in their future,” he said.

Mr Wells, who said NFU sugar had a perfect relationship with British Sugar ‘95 per cent of the time’, is now working closely with the processor to agree a framework to smooth out ‘the other 5 per cent’.

He said fresh negotiations were continuing with both parties eager to agree the ingredients for a long-term contract by the end of March 2010.

With the current EU sugar regime due to expire after 2014 the industry will attempt to secure a four year framework.

Any agreement must cover contentious issues such as campaign length, crowning, transport, procedure for temporary volumes and, of course, a pricing mechanism to avoid the annual stand-off.

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