Farmers strike deal with British Sugar for improved beet prices

Fenland farmer and NFU Sugar board chairman Michael Sly pictured in a field of sugar beet. Picture:

Fenland farmer and NFU Sugar board chairman Michael Sly pictured in a field of sugar beet - Credit: NFU / Tim Scrivener

East Anglian beet growers have welcomed a long-awaited deal with British Sugar bosses for a "substantial increase" in price for next year's crop.

Following a "difficult negotiation", the processing company and the National Farmers' Union's sugar board (NFU Sugar), jointly announced a new one-year contract with a fixed price of £27 per adjusted tonne for 2022 - up from £20.30 this year. 

The deal also includes the continuation of an assurance scheme to compensate growers for losses due to virus yellows disease, and the extension of a futures-linked contract.

The initiative, launched as a pilot last year, now gives all growers the option to seek higher prices by "hedging" 10pc of their tonnage on a variable-priced contract, linked to futures markets. 

Also new for this year is a "local premium" for all growers up to 28 miles from their nearest factory.

Current multi-year contracted growers will have the option to upgrade to a fixed £25 per tonne by committing to an additional contract year - but there will be no separate market-linked bonus. 

Fenland grower and NFU Sugar board chairman Michael Sly said: “Following another difficult negotiation, we have finally managed to agree terms with British Sugar.

"The substantial increase in the one-year contract price reflects the increased costs and risk sugar beet growers now face and recognises the fact that sugar beet must offer returns comparable with alternatives.  

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"The futures-linked variable priced contract offers both growers and the processor the potential to lock in attractive prices, meaning all parties can benefit from it.

"Other countries around the EU are starting to follow our lead on this and I am sure that this type of contract will become increasingly common as EU countries modernise their thinking and practices.”

North Norfolk contractor Kit Papworth, also a member of the NFU Sugar board, said: "I think this is a fair deal for both sides, given all the issues at the moment.

"Agreeing to continue with the futures contract is a really good system for growers. It means they can take a gamble on getting a better future price for their crop if they want to, with the caveat that it could go down as well as up.

"It has been one of the toughest negotiations for both sides, it went down to the wire but I think it is a good compromise."

Sugar beet harvesting in north Norfolk

Sugar beet harvesting in north Norfolk - Credit: Kit Papworth

Peter Watson, agriculture director for British Sugar, said: “We are pleased to be able to share the agreed contract prices with growers after a long negotiation.

"Our aim was always to agree a fair and sustainable price for all and we believe this is what we have achieved.

“Together with our virus yellows assurance scheme, the new local premium and the futures-linked contract we believe the contracts offer a competitive package for growers.”

Farming agents said the agreement offered a fairer balance of risk and reward.

Charles Whitaker, managing partner at the Norwich office of Brown and Co: “Hopefully this reflects a more joined-up approach of shared rewards between grower and processor to grow the area, tonnage and combined industry fortunes.

"Given the steep rise in global ag commodity values, the change in weather risk patterns, competition for land use and a laser focus on farm land-use net margins, this is just in time to influence late adjustments to 2022 cropping plans within cropping decisions which are being made as we speak.”