NFU Sugar responds to British Sugar's minimum price announcement

Published 09 July 2021

NFU Sugar
Sugar beet - Michael Sly

In response to British Sugar’s unilateral communication of a minimum contract price for the 2022/23 crop on 30 June, NFU Sugar has been clear it has not agreed to this price and negotiations are ongoing.

NFU Sugar continues to engage with British Sugar in good faith to seek better contract prices and conditions for sugar beet growers. Disappointingly, British Sugar’s offers have been well below the level growers have said is needed to offset the additional risks now faced in growing the crop.

Having been through a number of negotiation rounds, the offer NFU Sugar has communicated to growers (detailed below) is an offer we believe to be fair, balanced and in the industry’s collective interest, maintaining a critical mass of beet at the same time as providing enough reward to offset the substantial risk now associated with growing sugar beet.

NFU Sugar’s offer to British Sugar, communicated to growers on 30 June, was:

  • A fixed price of £27.75/t on a one- or two-year contract (including the opportunity for existing multi-year growers to upgrade if committing to both 2022 and 2023).
  • No market linked bonus.
  • Further roll out of the futures linked contract, with the formula adjusted in line with the fixed price uplift, making it optional but open to all growers with a 25% cap on the proportion of individual CTE that could be put on it.
  • Virus Yellow fund parameters improved as per British Sugar’s price communication, paid on the current terms.
  • An exit clause for all contracts if a Cruiser Emergency Authorisation is not granted on equal terms to the 2021 authorisation.

The proposal from British Sugar to NFU Sugar, communicated as a minimum price to growers on 30 June, consisted of:

  • £25/t for new one-year and two-year contracts, retaining a market-linked bonus.
  • Giving multi-year contracted growers an opportunity to upgrade to these same prices by contracting for an additional year. If upgrading from the 2021 three-year contract, 2024/25 would be offered at £23.50/t.
  • Strengthened Virus Yellow Assurance fund, raising the British Sugar contribution from 45% to 70% in total, and proposed opt-out in return for an additional 50p/tonne.
  • Local premium for all growers up to 20 miles from their factory, starting at £2/t for growers within one mile reducing on a linear scale down to £0.10/t at 20 miles.

Responding to British Sugar’s communication to growers, NFU Sugar board chair Michael Sly (pictured above) said:

“I want to be clear that NFU Sugar has not agreed to the indicative price that British Sugar published on 30 June and negotiations are ongoing.
“We believe that British Sugar’s offers so far have been well below the level growers need to offset the additional risks they now face growing the crop. We also believe that in the context of buoyant sugar market conditions and British Sugar’s strong profitability, as reported to Companies House, it can afford to pay significantly better contract prices to growers than it has communicated.
“NFU Sugar has proposed an offer to British Sugar that we believe is fair, balanced and in the industry’s collective interest.
“We will continue to engage with British Sugar in good faith to agree better contract terms for the 2022 crop.”

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