NFU Council: How NFU Sugar is working for growers

13 October 2021

NFU Sugar
NFU Council Sugar_81042

At its first fully in-person meeting since the beginning of the pandemic, NFU Council heard from NFU Sugar Board Chairman Michael Sly about the organisation's work on behalf of growers.

This year's negotiation

“We agreed the 2022 beet contract with British Sugar in September after six months of difficult negotiations.

“This included British Sugar making a mockery of the negotiation process and trying to sideline NFU Sugar when they announced an indicative minimum price of £25/t for a one-year deal at the end of June.

“This was clearly never going to be enough given comparative crop returns, but it took for the negotiation to be escalated to British Sugar’s parent company (AB Sugar) for common sense to prevail.

“The headline is that the one-year price is 33% higher than the previous year’s price of £20.30/t.  This doesn’t mean that growers will make a killing in 2022 – it simply means that we’ve managed to secure a price for growers that better reflects the increased costs and risks they face in growing the crop.”

The futures-linked contract

“I am very excited by the further roll-out of the futures linked contract. It was piloted in 2021 and allowed growers to take on price risk management themselves, while providing British Sugar with a known margin over beet. Although it remains limited to 10% of any individual contract, it is now open to all growers as an option.

“We have also been criticised by some growers for agreeing to the local premium. To be clear, this is not something NFU Sugar wanted but was something British Sugar insisted on as part of the deal. The priority for NFU Sugar was ensuring the base price for all growers reached a level that recognised the significant cost and risk increases growers are facing.

“British Sugar’s aim with the local premium is to disproportionately incentivise additional beet to be grown nearer to the factory – the industry is about 10,000ha short of the area it ideally needs, and British Sugar’s long-term desire is that this is grown close to the factories to reduce haulage costs.”

Campaign update

“With the crop declarations all in, we now know that only 91,000 ha of sugar beet was planted in spring 2021. That’s a 12% year-on-year reduction and a clear indication that growers cut back area or stopped growing sugar beet following the devastating Virus Yellows yield impact on the 2020 crop.

“It has been a slow start to the current campaign. Harvesting conditions have been generally good, but the factories (Newark and Bury in particular) have been having equipment problems which has slowed down slice and reduced letter calls.

“The big issue we are facing this campaign is the availability and cost of haulage. Beet hauliers are struggling to find and keep hold of drivers and having to pass on the huge wage cost increases to growers.

“NFU Sugar has written formally to British Sugar asking for a one-off increase in transport allowance this campaign to try and cover at least some of the increased haulage costs growers face. But British Sugar has flatly refused to entertain the request, basically saying it’s the growers’ problem if they haven’t locked in good rates with their hauliers. 

“But an even greater concern is how British Sugar’s stance will impact campaign length. We believe British Sugar’s only option is to keep the factories open for longer – to ensure growers can get all their beet hauled.  This in turn creates a green bridge for aphids and increases the risk of virus yellows in the 2022 crop. Something our industry could well do without.”

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