Forward index-linked sugar beet contract – your questions answered
We answer your questions on the new, forward index-linked sugar beet contract pilot, launching for 2027/28 for UK sugar beet growers.
Concept
The concept of the new contract is different to the current (annual) index-linked beet contract. Under the current mechanism, a grower must decide to contract following the negotiation of the fixed price between British Sugar and the NFU for that year.
In the new mechanism, growers will be able to see the two-or three-year forward price as it develops in line with global sugar prices and currency movements without having the obligation to contract any of their beet during a specified contracting window.
If the price gets to a level deemed attractive, a grower can contract a percentage of their beet (subject to Czarnikow compliance checks and CTE restrictions being met).
For this pilot 50,000t tranche, British Sugar and NFU Sugar have come to an agreement whereby a £160 fixed rate will be deducted from the October 2027 No 11 futures contract price converted into UK pounds. This will give growers price visibility prior to contracting.
How do I take part?
Interested growers must pre-register for the pilot scheme. Doing so will give you visibility of the index-linked beet price for 2027 on the CZ app trading platform and allow you to price quickly if you wish. By pre-registering, growers are not contracting or committing to make beet sales.
All growers who have signed up to an index-linked contract in the past will be pre-registered automatically.
If you have not previously been on an index-linked contract and would like to pre-register for the pilot scheme, please contact the British Sugar Services team on freephone 0800 090 2376 or email [email protected].
Price access
A grower will not be able to gain price visibility in the CZ app without having contract and compliance checks completed by both British Sugar and Czarnikow, respectively.
All growers who have previously had an (’one-year’) index-linked contract will automatically have access to the evolving two-or three-year price. For new growers who would like access to the price in the CZ app, they can ‘opt in’ via My British Sugar Portal when there is an open contracting window. All relevant details will then be passed on to Czarnikow who will then complete compliance checks and create your CZ app account.
Novation process
Once a grower has price access in the CZ app, a button will appear under the relevant price which will say ‘Request for Novation’. Once this has been clicked, you will be asked if you want to be directed to the My British Sugar Portal where you can then complete the novation process.
Once British Sugar confirms the novation has met all the criteria, all relevant information including beet volumes novated will be passed on to Czarnikow. Your contract in the CZ app will be promptly created by Czarnikow who provides best endeavours for this process to be complete and for growers to then have ability to lock in sales prices within 24 hours.
Growers must note that the price is subject to change during the novation process. No price is guaranteed until a grower has submitted an order in the CZ app.
If a grower decides to novate their crop through the My British Sugar Portal without an active CZ app account, Czarnikow cannot guarantee when a grower will have live pricing access given compliance and system checks will not be complete. It is therefore deemed important that growers pre-register for CZ App access and beet price visibility.
The importance of pre-registering: By pre-registering, growers get visibility of beet prices and can price quickly if they wish to do so but do not commit themselves to making sales. All growers who signed up to an index-linked contract in the past will get price visibility automatically.
Key dates
The first tranche of beet that can be priced under this new model will be for the 27/28 season. The launch of this contract will be on 2 March 2026. Growers will be able contract against the tranche until the 2027/28 contracting window closes. Once volumes have been novated and contracts created, growers will be able to price until the contract expires on 31 August 2027.
Grower pricing will be available in the CZ app between 9am and 5:30pm on each working day. NB grower pricing will not be available on each US public holiday as the NY11 sugar market will be closed.
Selling your beet on CZ app
The beet price at any given time will be displayed on the CZ app. It is based on a formula that starts from the price available on the Oct-27 ICE Sugar No.11 Futures market, converts into £ sterling using the forward $/£ exchange market, subtracts a fixed negotiated factor, divides that figure by 6.25 and deducts a service fee to generate a beet price derived from the two markets (No 11 and exchange rate).
The fixed factor is negotiated between the NFU and British Sugar. For the pilot, it will be set at £160/tonne.
Any beet not priced on or before 31 August 2027 will be priced automatically at the price available that the following day (1 September 2027).
Beet will need to be priced by 1 September 2027 in order to ensure each grower’s beet value on this contract is known prior to the campaign. As campaign and delivery dates are liable to change, the 1 September date ensures the pricing process will not be impacted by the campaign.
Effect of USD to GBP FX rate
The price quoted to you via Czarnikow’s online portal CZ app will be in GBP/t beet. Given that global sugar prices are quoted in USD, the USD/GBP FX rate will affect final beet prices. Prices will change regularly depending on the value of the Oct-27 ICE Sugar No.11 Futures market and the Dec-27 USD/GBP exchange rate at any moment in time.
Growers will, however, be guaranteed to receive the price they see on the pricing platform when they choose to execute pricing. That price will be fixed.
The novation agreement
If you choose to sign the novation agreement, then this will become a binding contract. The beet will still need to be physically delivered to British Sugar under the standard terms of your contract pack, but the pricing of that beet will now be executed via Czarnikow as per individual grower instruction as described above.
Payment
You will be paid within 24 hours of British Sugar’s standard payment terms. British Sugar will make payment to Czarnikow under the same standard terms as for other contracts, and Czarnikow will pay you for this beet within 24 hours of receipt of funds from British Sugar.
Czarnikow will provide an invoice and confirm the value achieved. This will be available to growers via Czarnikow’s app (CZ app).
You will also receive a beet invoice as usual from British Sugar, with a ‘nil’ value attributed to the beet on this contract, but all other payments (LDA, transport allowance, payments for beet on other contracts, BBRO and NFU levy deductions) will come directly from British Sugar as usual.
CTE (Contract Tonnage Entitlement) allocation
For the pilot, it has been agreed that growers can sell up to a maximum 10% of their CTE on this contract (this percentage may change for any future tranches).
Trades must be executed in minimum 50 tonne parcels so that appropriate volumes can be accumulated for execution on the market. As such, the minimum a grower can allocate the model shall be 50 tonnes of beet.
The pilot scheme has an overall limit of 50,000 tonnes of beet for the 27/28 season that is currently in place. This has the potential to be increased subject to NFU and British Sugar agreement either under the current formula and negotiated factor or with a revised formula still to be agreed.
There would be no daily limit for grower sales of beet, the only restriction being the total volume committed by you under this pilot.
NFU Sugar position
Whether or not you choose to put a portion of your beet on this contract is completely at your discretion. The NFU does not give any endorsement or recommendation regarding the options contained within the contract offer.
Potential risks
By contracting, you make a commitment to British Sugar to deliver the agreed tonnage and you are responsible for meeting this requirement in full regardless of the price(s) that you receive for the beet. Please consider the risk of under-delivery, if (for example) your crop fails to grow or cannot be sold due to contamination or disease.
In such circumstances, Czarnikow may seek a lump sum payment from you if you have committed a certain tonnage to its flexible pricing structure which you can no longer honour. British Sugar may also impose a financial penalty if the agreed tonnage set out in the contract pack is not delivered.
The index-linked contract means that the price at which growers can sell their beet will change over time until you make use of the hedging arrangements offered by Czarnikow to fix a particular price. Markets change constantly due to various factors, and the price will go up and down over the course of the time that you engage Czarnikow. This means that there is no guarantee that the flexible pricing option will result in you generating more income from this option instead of continuing with the current fixed price approach negotiated between NFU Sugar and British Sugar.
You may want to consider taking out suitable insurance cover to protect against crop failure and contamination. Please contact your insurance provider to explore what options might be available to you.
There is a “counterparty risk” that Czarnikow may face financial difficulties of its own (eg, insolvency) which could result in it not being able to honour its pricing arrangement with you.
The risk of a grower not delivering all of the tonnes contracted through the index-linked contract, has been minimised by putting in place the limit to the CTE an individual grower can put on this contract. Furthermore, British Sugar will allocate the first beet you deliver against this contract regardless of sales price achieved, meaning that even in a case of severe yield loss you are unlikely to underdeliver against this contract, provided you plant enough crop area in the first place. However, in the event that you still weren’t able to deliver your beet priced under the novation agreement then there could be a financial penalty linked to Czarnikow having to close out ICE Sugar No.11 Futures and USD/GBP positions that had been established to provide you with your final per metric tonne beet price.
Market analysis
Pricing decisions are strictly for each individual grower to make. Czarnikow will provide some market analysis on the CZ app, but this does not constitute pricing advice. Access to CZ App analysis can be provided to all growers whether or not participating in the index-linked contract this year.
Global sugar supply and demand dynamics will affect the price evolution and direction of the ICE Sugar No.11 Sugar futures market.
Furthermore, NFU Sugar may circulate sugar market analysis from various sources, but does not endorse any particular provider of market analysis nor will this in any event constitute pricing advice.
Following demand from sugar beet growers, Czarnikow has improved certain functionalities in the beet pricing tool. Growers can set up to 10 ‘price alerts’ which will trigger an automatic email notifying that the selected price has been reached. This will be triggered at a maximum of twice per day: once if the price goes above and once if the price goes below the selected price. The beet pricing tool also offers growers the ability to submit ‘limit orders’ in the CZ app. This means growers can submit an order above the current market rate, and it will be executed automatically if the selected price is reached.
You will not be able to re-buy and sell again. Once you fix the price, that parcel of beet will have been fixed and you will not be able to unwind and reprice at a later date.
Czarnikow app training
Czarnikow has, in the past, arranged training sessions for those growers who have novated contracts in order provide CZ app training and to answer specific questions around the sugar beet index-linked contract. This is normally held around the ‘go-live’ date.
AB Sugar
AB Sugar has owned shares in Czarnikow since 1991. Czarnikow acts as a totally independent company, working with numerous producers and multi-national sugar consumers worldwide. Your pricing with Czarnikow will be entirely independent of British Sugar’s pricing, meaning that neither party will see the price achieved by the other. Czarnikow operates separately from British Sugar, so confidential information such as pricing will not be shared.