British Sugar offer £37.50/t minimum for beet next year

Commodity prices boomed after the Russian invasion of Ukraine last year - and remain volatile.

British Sugar - which is still in negotiation with the National Farmers' Union's bargaining body NFU Sugar - has written to growers setting out a minimum offer which is below the £40/t growers will get for this year's crop.

It includes for an uplift if prices do well next year and "a compelling mix of high rewards and managed risks" - and an average grower margin of around 20% to 25% the company said.

British Sugar's director of agriculture Daniel Green said the aim was to give growers confidence to choose beet in their cropping plans for next year. The reaction from growers has been muted, and the NFU isn't commenting.

"It's been very quiet and obviously you have a mixture of views. I think the growers will always ask for more. In our minds it's a very fair offer," said Mr Green.

This year's sugar talks began in May and are ongoing. While last year the two sides came to an agreement in June, the year previously it was the end of September, he pointed out.

This year's campaign - or beet harvest - has already begun. British Sugar's Bury St Edmunds factory started up three weeks ago and Wissington started slicing yesterday. Cantley is due to open on October 9.

British Sugar produces around 1.8m tonnes of sugar - which serves about 50% to 55% of the UK market. This is grown over about 95,000 to 100,00ha - much of it close to the sugar factories in East Anglia. The rest of the demand is fulfilled by Tate and Lyle's sugar cane product and some European imports.

Beet growers enjoyed a whopping 48% price boost last year when they were offered £40 a tonne for this season's crop as commodity prices soared.

But Mr Green said since then input costs have been pegged back, with fertiliser down 50%, and wheat and oilseed rape prices down 30% and 35% respectively. 

"Despite these changes we are keeping our fixed price element as high as we can for 2024/25 because we want beet to remain a financially attractive part of your rotation, encouraging you to invest in beet for the future," he said in a letter to growers.

Mr Green said the industry was facing a "complex picture". "It's very difficult to know what sugar prices will do - that's why we have introduced a market linkage," he explained.

He acknowledged there were challenges in growing the crop but the company was piloting an adaptable campaign plan to help farmers, he said. This year there were also cash advances to help farmers, and an early delivery bonus.

"We have got a really strong offer, a fair offer with a market linkage in there which will reflect any market upside," he said.

"We want them to do well. We want them to grow good crops of beet with good returns for them."

There was lots of interest from growers and non-growers in the offer, he said.

"I think it's an attractive offer. I think it stacks up well against other crops you can grow and I think all our growers shoudl be willing to plant as much as they planted last year.

"The economics speak for themselves I think."

Suffolk NFU branch chairman Andrew Blenkiron said: "While appreciating everything that British Sugar say in their letter to growers the price of the 24/25 sugar beet crop needs to be agreed between British Sugar and NFU Sugar. 

"One of the principle reasons for NFU members forming a collective voice in sugar beet issues is for our representatives to reach agreement on future pricing with the British Sugar team. 

"Given that we are running out of time to make decisions with regard to next year's cropping I do hope that the two parties can reach agreement very soon."

David Nunn, who farms with son, James, at Stowupland, near Stowmarket, said they would be waiting for a deal to be struck between NFU Sugar and British Sugar before making a final decision.

"I think it must put you in a bit of a state of uncertainty because the £40 is the figure we quite liked," he added.

Farmers were facing the loss of their traditional subsidy, he said. "Sugar beet isn't a cheap crop to grow but I think we would certainly not sign anything until we saw a figure nearer £40."

The crop should only be grown every five or six years, and his farm sets aside about 125 to 130 acres for it every year, drilling it in the spring.

"We could grow peas as a spring crop so that gives us a bit of flexibility and we have done well over the last two years with peas. They don't damage the soil as much as sugar beet," he said.

"I think it's important we stand behind the NFU and we have asked them to negotiate on our behalf."

The Nunns won't begin harvesting their beet crop until the first week of October but it appears to have done well this year. However, it still needs plenty of sunshine to get the sugar levels up, he explained. "We are looking forward to a good crop."