“Ground-breaking” contract changes have given East Anglia’s sugar beet growers a new insurance against crop disease risks – while also opening up the potential for higher returns by playing global markets.
British Sugar and the National Farmers’ Union’s sugar board (NFU Sugar) have negotiated new contracts from 2021, including a £12m virus yellows crop assurance fund and an innovative futures-linked contract pilot.
The assurance fund will compensate growers for a proportion of yield losses from virus yellows disease, which has become an increasing concern since the ban on neonicotinoid seed treatments, previously used to protect the crop from virus-carrying aphids.
Grower’s losses will be compensated if they deliver less than 90pc of their contracted tonnage, provided they meet certain conditions. British Sugar says it will pay 45pc of the value of the shortfall, with the compensation payment capped at a 35pc yield loss.
Meanwhile, 100 growers will have the option to allocate up to 10pc of their tonnage onto a futures-linked variable-price contract, in the first year of a pilot scheme giving UK growers access to the sugar futures market for the first time and allowing them to make their own decisions on when to fix the price of beet.
Standard prices have also been agreed for 2021. A one-year contract will pay £20.30 per adjusted tonne of a sugar beet, with a 10pc market bonus triggered when the EU reference price for sugar exceeds €375 per tonne. The three-year contract for 2021-23 will pay £21.18 per tonne, with a bonus of 25pc of the value above the trigger sugar price of €400 per tonne.
NFU Sugar board chair Michael Sly said: “This negotiation has taken place during some very challenging times for our industry, particularly with the ongoing virus yellows issue growers are facing.
“NFU Sugar has worked constructively with British Sugar to deliver a credible deal which includes a ground-breaking virus yellows assurance fund, to help mitigate some of the growers’ risk.
“We have also been working hard over the past couple of years, to develop a new risk management tool for growers. The innovative futures-based contract, announced as a pilot today, means that growers can - for the first time - price their own sugar beet.
“This deal builds on the work of previous years in providing greater transparency and lays stronger foundations for the future. In what will be a more volatile world, we believe this agreement helps support a sustainable homegrown sugar industry in the UK.”
READ MORE: New sugar tariff quota leaves a bitter taste for East Anglian beet farmersNorth Norfolk contractor Kit Papworth, also a member of the NFU Sugar board, added: “This is a really good deal for growers, and it secures sugar beet growing in East Anglia and Norfolk going forward.
“It gives a safety net underneath you against virus yellows, which is very serious this year and it could be incredibly serious going forward. So it is an important safety net for those worst affected.
“And if you fancy a bit of a punt and taking a bit of extra risk, you can do it. If you feel you can see the future better than British Sugar then you can take a punt on the market and some will benefit from that in terms of their returns. It is a risk, but it allows growers to break out of the cycle of low prices.”
British Sugar’s agriculture director, Peter Watson, said: “Our new contracts offer a competitive support package for each and every grower, which sees a fair price, market-linked bonuses, and flexibility and innovation.
“Given the difficulties many growers have faced in recent months with aphids, we are particularly pleased to offer our new virus yellows assurance in the contracts, to help support growers through the challenges of the disease.
“Growers will also continue to see investment in the future of the sugar industry, through science-led advice and guidance from the BBRO (the British Beet Research Organisation), innovation in seed technology, and industry-wide advocacy for plant protection products and future breeding techniques.”
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