Sugar boss renews beet price offer to growers as talks stall

The company - which has sugar factories across East Anglia including one at Bury St Edmunds - and the  National Farmers' Union (NFU) Sugar - which represents growers - have been at loggerheads for months.

The company has already raised its offer to beet growers to a flat £40/t for their crop during the latest arbitration talks.

However, the two sides couldn't reach agreement over a Futures deal, which the company argues is only of interest to a very small number of growers. 

The two parties got back to the negotiating table after the government stepped in to urge them to re-enter talks.

But now the company's agriculture director Dan Green said it would reopen the contract and seed order screens on Monday, December 18, "so growers can confirm their intentions".

“Despite intense negotiations over the past couple of weeks, and despite reaching alignment on the vast majority of commercial terms, we have not been able to reach final agreement with NFU Sugar on next year’s beet contract," he said.

“The only outstanding contract term which is now disputed is around the Futures contract. It is particularly disappointing that an issue which affects so few people – currently just 1% of our grower base - will delay us agreeing an offer which will benefit the vast majority. 

“We have improved our offer to include a fixed price option at £40/t, matching the price for the current crop, despite the recent declines in the sugar price and in farmers’ input costs."

The bones of the deal are agreed, he said, with growers offered a choice of a £40 fixed price, or £38 plus market-linked bonus (yield protection costing £1 in either case).  

The two parties have also agreed a future negotiation process ensuring growers would normally get a crop price in July, he said.

Talks would start in May - with a British Sugar/NFU escalation and dispute resolution process ending no later than October 31 so growers will always have certainty for the following year. 

“The Futures contract is a high-risk product which has only been attractive to a small minority of growers," said Mr Green.

"We have offered to launch it for next year on the same basis as the 2023/24 price. However, the NFU’s insistence on locking in a fixed discount today presents significant risk to both grower and British Sugar.

“As we have said before, we sell almost all of our sugar through fixed price annual contracts and therefore we cannot cover the risks inherent in the futures contract.

"If we agree a discount factor on the model, both ourselves and the growers who choose it will face greater risk.

"A small movement in the US dollar exchange rate or world sugar futures price would present magnified price swings to growers, and potential losses to British Sugar of millions of pounds.

“Arbitration is time consuming for all and could take between two and three months to finally conclude."

The company is also offering alternative market-linked bonus options and options with and without yield protection.

NFU Sugar has been approached for a response.