British Sugar Announces New 2011 Sugar Beet Contract

The price now reflects grower input costs (fuel, fertiliser and chemicals etc.), overhead costs (fixed costs) and adds a margin based on the forward wheat price (LIFFE) and the Euro/GBP exchange rate.

31 May 2010 --- There has been speculation regarding the sugar beet contracting round in 2010 and specifically the price that will be offered for sugar beet for the 2011 crop season. Following the new Inter-professional Agreement between British Sugar and the NFU the price is determined using a new beet pricing mechanism.

The price now reflects grower input costs (fuel, fertiliser and chemicals etc.), overhead costs (fixed costs) and adds a margin based on the forward wheat price (LIFFE) and the Euro/GBP exchange rate.

The pricing mechanism will be run during the first two weeks of June to determine a ‘fixed’ price to be offered to growers at the commencement of contracting, before the end of June, for the following year’s crop. This enables growers to contract with British Sugar at a known price that should give them a guaranteed and competitive margin compared to other broad-acre arable crops.

With the present exchange rate fluctuating between €/£0.84 to £0.88 we anticipate a beet price between £24 and £25 per tonne of adjusted beet. However, there is a significant uncertainty over the Euro at present, so a risk remains that it could fall outside this band.

The actual price will be confirmed when growers receive their Offer documents by post or online at the end of June.

British Sugar has also agreed to invest up to £7 million in an ‘Outgoers’ scheme aimed at facilitating the transfer of contract tonnage from low yielding growers at distance from factories to higher yielding growers closer to factories. Those leaving the industry under the scheme would receive compensation payments from British Sugar. The scheme will enable growers with higher yields to expand their sugar beet enterprises following the recent high demand for extra contracted tonnage.

William Martin, NFU Sugar Chairman and Gino De Jaegher, British Sugar Managing Director commented, “Over its life we believe this agreement will allow the great majority of growers to make good margins and in normal circumstances will ensure sugar beet is competitive against other broad-acre crops. We also strongly believe this agreement will improve the stability, relationships and competitiveness within our industry and help ensure a sustainable future to the benefit of both growers and processor”.