With haulage costs rising rapidly across all sectors, beet growers risk being unable to compete with other customers this year. In practice, this could mean that without an increase to the rates growers can offer hauliers, beet haulage slips down operators’ priority lists and capacity is lost to other sectors.
Although it works well in most years, NFU Sugar does not believe that the usual mechanism for setting an interim Transport Allowance, adjusted at the end of the campaign based on costs, will allow the industry to secure the haulage it needs this campaign.
The full text of the request to British Sugar:
As we have both acknowledged, the beet industry (in common with all other sectors) faces a crisis in haulage costs.
On top of the usual variations in fuel costs, which are accounted for in the Transport Allowance mechanism, driver and other associated costs are rising rapidly. As a result, growers are facing vast increases in haulage costs.
With other sectors paying up to £2,000 a day for haulage, the current Transport Allowance does not allow beet to compete, putting it well down the priority list.
In practice, this very simply means you will not get the supply of beet arriving at the factory when you need it. This is not in growers’ interests or your interest.
In order to ensure a supply of beet, British Sugar must pay an increased rate this year. This cannot just be adjusted at the end of campaign, but will need to be paid up front.
This will not be money into growers’ pockets but will simply allow them to secure the haulage the industry needs rather than let capacity go to other sectors.
We need to ensure beet work is sufficiently attractive to enough hauliers to choose to haul enough beet this year. The longer British Sugar stands by and does nothing, the more problems it will cause for us all.
Growers will be unable to move beet to your factories within the cost of the transport allowance, meaning beet supply at factories will be short throughout the campaign, and growers will have to increasingly subsidise haulage costs from out of the beet price.
This will create yet another nail in the coffin for beet, and push growers into planting alternatives where they can be confident of a return.
The mechanism we have for setting haulage rates works well in most years, but the unprecedented crisis this year is an exception. Growers are telling us that rates are up by as much as 20%, and continue to climb.
Noting the rapid increases in rates across the industry thus far, we believe as a specific measure this campaign a further 10% increase in Transport Allowance rates is needed now as a minimum. We will also need to continue to jointly look at this throughout the campaign.
To be clear, we are not requesting a permanent deviation from the rule, but a measure specific to this year to address the unprecedented crisis we face. We believe the costs to both you and growers of doing nothing will be far greater than the cost of taking action now.