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Sugar beet to enter new era of unrestricted markets

Growers are likely to be required to choose whether they want a fixed price or a more market-driven contract


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Sugar beet growers may be able to mix different contracts for proportions of their crop
Sugar beet growers may be able to mix different contracts for proportions of their crop

Cost competitiveness is likely to play a much bigger role in the UK sugar market going forward.

 

At the NFU’s Growing Beet After Quota event in Peterborough last week, experts discussed how the post-quota UK beet industry might look and gave opinions on possible contract arrangements.

 

Attendees heard the UK and European sectors would be allowed to process as much beet as possible and there was a feeling this would bring both opportunities and threats.

 

Martin Todd, managing director at economic consultancy LMC International, said: "In the absence of quotas there will be no limits on what an individual processor can supply to the internal market. The industry will be able to grow as much beet as it chooses.

 

"In the internal market there will be competition from imports and isoglucose."

 

With exports likely to play a greater role in the UK sugar sector following the end of quotas in 2017, Mr Todd added there would also be greater competition in the world market, especially from Brazil.

 

Much of the event’s discussion centred around how contracts might be conducted between growers and British Sugar following the abolition of quotas.

 

Growers will likely be required to make a choice between a similar system to that already in place or a price linked more closely to world sugar markets. Growers could also be able to mix these two options for a proportion of their crop.

 

NFU sugar beet board chairman William Martin said: "A lack of volatility and a stable return is going to suit businesses very well. Some will feel there is the option to get good returns from the sugar beet market [at times].

 

"The question is how will a contract be structured to make it sustainable for both parts."

 

British Sugar managing director Richard Pike suggested growers would have to make this choice.


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Contracts: the main possibilities

  • Longer term contracts
  • Similar fixed-price contracts to the mechanisms currently used
  • A contract which offers a degree of both for different proportions of beet
  • Prices linked to the sugar market or linked to another crop
  • Different prices for delivery of beet at certain times of the year
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