The pricing platform has been developed by NFU Sugar, with support from British Sugar, and has been delivered by the supply chain service company Czarnikow. It will enable growers to take advantage of new futures-based contracts agreed between NFU Sugar and British Sugar in its latest contract offer, and will be offered via Czarnikow’s client platform, Czapp.
The platform will initially be tested by a pilot group of growers as part of a year-long pilot programme, with the intention to then roll it out more widely across sugar beet contracts.
The pilot will allow growers and British Sugar to price beet independently of each other for the first time ever. This means growers can lock in prices when it is attractive to them and British Sugar will only have to pay the price that they have independently set.
NFU Sugar board chairman Michael Sly said: “This is a hugely exciting project and something we have been working hard on for a number of years, in response to calls from growers for more control over their sugar beet price.
“In the pilot, growers will be able to see the live value of the sugar they are growing in their crop for the first time ever and make independent pricing decisions based on that data.
“This can be a win-win for the industry. It will give growers flexibility to lock in attractive prices at a time to suit them and take the opportunity and risk the market offers them into their own hands.”
Jonathan Williams, Director at Czarnikow, said: “We are delighted to be a part of this innovative pricing structure for UK growers.
“It has taken a lot of hard work and creative thinking from NFU Sugar and British Sugar to allow us to launch the project this month and we are confident growers and British Sugar will both benefit by taking direct control of their own price management.
"Independent pricing is here to stay, and it’s only going to increase in volume and sophistication in future years.”
British Sugar’s Peter Watson said: “British Sugar recognises the desire in some growers to take more risk and price their own crop. Together with the NFU we believe we have developed a new contract type to allow this to happen.
"This years’ pilot scheme is truly innovative for the sugar beet sector with growers able to take positions on the sugar market for a proportion of their crop, much in the same way as other cereals crops. An exciting opportunity for all in the future.”
- Growers involved in the pilot have the option to transfer up to 10% of their contracted beet tonnes from the traditional fixed price contact to the variable priced contract. This contract will be set by a formula directly linked to the No. 5 sugar futures market.
- As the programme grows, Czarnikow envisions larger percentages of crops having the flexibility to opt out of fixed prices.