Given the low 2019 price for sugar beet, many farmers may be considering dropping the crop altogether.
Robin Limb investigates growers’ options for the years ahead...
The 2019 sugar beet contract is about to land on growers’ doormats or via e-mail inboxes, and some may be contemplating their options.
As they look out of the office window at this year’s average crop, and watch prices for alternatives firming, they may be forgiven for wavering slightly. Will the 2019 beet price be sufficient to maintain growers’ commitment to the crop?
Many farmers have already locked into forward wheat contracts at £175/t, thereby ensuring a good margin before having sown a single seed, although a second wheat may perform no better than sugar beet.
Against the backdrop of low internal EU sugar prices of around €360/t, not one processor is really making money.
British Sugar had no option but to negotiate a lower price for 2019, given the depressed market conditions. Faced with little, if any, manufacturing margin it cannot afford to pay a penny more than necessary.
In return, the NFU was reluctant to concede to a price reduction, given the buoyant market conditions for competing crops.
There is no longer a cake to be argued over – it now more resembles a small iced bun. Little wonder the new beet contract has been delayed for so long.
Growers should examine the fine print of the new contract carefully to ensure they are fully aware of some of the guarantees it offers, including a future commitment to greater risk/reward incentives linked to the fortunes of the sugar market.
Although the guaranteed price for 2019 is lower, at £19.07/t, in reality, when the crown is paid for, this will equate to £20.42/t.
Additionally, the sugar market bonus will be triggered earlier at €375/t, and growers will share in a greater percentage – 15 per cent – as prices rise.
If the 10-year low world sugar price starts to recover next year, it only needs to push the EU price up by €15/tonne before a bonus will kick in.
All crop yields have disappointed in 2018, due mainly to a cold, wet spring and dry summer. Sugar beet is still playing ‘catch up’, but given a favourable autumn and winter, it may yet recover some lost ground – only time will tell.
The question today is: ‘Are there credible alternatives to beet?’
Oilseed rape crops have already been sown, and some farmers may have decided to un-complicate their rotation by reverting to an all-combinable crop rotation, substituting beet area for rape instead: the economics of both look pretty similar for the coming year.
Most farmers own a seed drill and a combine harvester, and some might ask why they should fork out for contract beet harvesting as well.
In the mid-1970s the situation was not too dissimilar, however the important distinction with today is beet yields are now much higher.
If we go back more than 40 years, a run of drought years and crippling virus yellows infection put sugar beet on the back foot, compared to more profitable and easier alternatives which came from a combine spout.
Many farmers tore up their beet contracts in disgust, and spent the dreary winter months in the Caribbean, rather than having to pull the covers over beet heaps in frosty weather.
Appealing as this may have seemed, there was a drawback. Sugar beet remains the break-crop of choice in many arable rotations in Eastern England, and is also popular as a fodder crop in the west.
Despite its dwindling profitability, beet still contributes to the farming smorgasbord of options. Spring sown crops afford the ability for blackgrass control and break the cycle of disease carry-over which is an inevitable by-product of continuous winter cereals.
Many farmers who unceremoniously dumped beet in the 1970s later came to regret it, as both yields and prices subsequently soared.
Sugar beet yields have grown by over 60 per cent since that time, leaving all other broad-acre crops in its wake. This potential shows no sign of abating in the immediate future.
In 2017, a new record average yield of 83.4t/ha was set, due mainly to ample sunshine and rainfall in equal measures. The outcome of the 2018 crop is still unknown, but it will certainly not break many records.
A delayed sowing period, coupled with two months of drought, has reduced yield potential significantly, and only a following wind will compensate from now on. Rarely have there been two such consecutive and diametrically opposed years for sugar beet.
So what should growers do? Sugar beet has delivered huge profitability over many years for both the farmer and processor, but changing market dynamics in a post-Brexit world may put a different complexion on its prospects.
On paper, the British sugar beet industry is among the most efficient and lowest-cost in the world and this should stand it in good stead under any scenario once we leave the EU, and the Sugar Regime.
We may have to face greater import pressure from subsidised countries such as Brazil, but should growers be worrying about this as long as there is a guaranteed beet price on offer?
The removal of neonicotinoid seed treatments represents another challenge to be faced, with few alternatives to control the aphid vectors of virus yellows disease, plus many other pests to boot.
Worse still is the fact that the insecticide sprays which once controlled aphids are no longer available or effective, due to chemical resistance in the aphid population.
Having to fall back on pyrethroid sprays will only harm the beneficial insects which predate on aphids, such as ladybirds, lacewings, and hover flies, acting as natural control agents.
Despite the many so-called ‘hassle factors’ associated with growing sugar beet, the crop still has much to contribute to the arable rotation in the regions where it is grown.
Market forces will now increasingly dictate the future profitability of sugar producers, but for growers the key factors will be attainable yield and the guaranteed price British Sugar will offer, plus the bonuses that come to fruition going forward.
SOME growers have already planned to turn their backs on sugar beet after the 2019 contract price dipped below the psychological £20/t barrier.
Suffolk grower John Collen said he was ‘very, very disappointed’.
“We have already made the decision we will put fewer fields into sugar beet,” he said.
He added the price point this season was very close to their cost and they would need around £22.50/t to stack up against other crops.
“The other thing is we are all expecting to be growing without neonics. Seed treatments have been a massive factor in recent yields,” he said.
Cambridgeshire farmer David Walston has also dropped one field of beet from rotation.
He said he would have continued with £25/t.
“Now the price is confirmed, I will probably drop the other field as well, most likely in favour of spring oats,” he added.