Sugar beet sector moves to improve price certainty

The NFU and British Sugar have agreed on a formula they think will work for some years, to save annual negotiations.

Prices for next winter's crop are already agreed but the new formula will be tested so farmers can see how it will work when used in earnest, in 2011. It is not then due for renegotiation until 2015.

The idea is that independent consultants will take in a number of factors, including fertiliser and transport costs, and the value of alternative crops, and will produce a price before June 30 each year which British Sugar will be bound to pay for its contracted tonnage.

Where British Sugar wants extra tonnage – for temporary increases in bio-ethanol output, for example – it will publish a full explanation along with the price it offers.

British Sugar has also agreed to try out next winter, with growers who volunteer to take part, a new system for paying transport costs according to a formula.

And it will put up to 7m into a fund to compensate growers who want to give up contract entitlements because they are too far from the remaining factories to make a reasonable profit. Details of this scheme have yet to be finalised.

William Martin, chairman of the NFU Sugar Board, said: "This agreement will lead to greater certainty within the British beet industry and less adversarial relationships between growers and processor and will improve the competitiveness of the sector.

"We believe it is the most progressive sugar beet agreement to be found anywhere in Europe, and is at the leading edge for any agricultural product."

Karl Carter, for British Sugar Group, said: "This represents a firm platform on which the NFU and British Sugar can stand together, shoulder to shoulder."