A costly arbitration process now awaits with no agreement on the 2024/25 sugar beet contract, something NFU Sugar considers will cost British Sugar more agreeing to the ‘sticking point’ of the futures contract.
British Sugar offered growers a choice of a £40 fixed price, or £38 plus market-linked bonus.
Dan Green, Agriculture Director, British Sugar said: “The Futures contract is a high-risk product which has only been attractive to a small minority of growers. We have offered to launch it for next year on the same basis as the 2023/24 price. However, the NFU’s insistence on locking in a fixed discount today presents significant risk to both grower and British Sugar.
“We sell almost all of our sugar through fixed price annual contracts and therefore we cannot cover the risks inherent in the futures contract. If we agree a discount factor on the model, both ourselves and the growers who choose it will face greater risk. A small movement in the US dollar exchange rate, or world sugar futures price would present magnified price swings to growers, and potential losses to British Sugar of millions of Pounds.
“Arbitration is time consuming for all and could take between two and three months to finally conclude. So, British Sugar will reopen both the contract and seed order screens on Monday, 18th December so growers can confirm their intentions. More information will follow on this.”
NFU Sugar Board’s chairman Michael Sly was “astounded” by British Sugar’s stance. “In our view, it is essential to us that growers always know what they are signing up to, whether on the futures linked contract formula or any other term. As such we must come to agreement on the factor to be used in the formula.”
An NFU Sugar statement reaffirmed that growers have been clear in their desire for greater economic empowerment, which the futures linked contract delivers. NFU Sugar had repeatedly made clear to British Sugar that the futures linked contract is an integral part of the package. Growers must have the opportunity to opt for a meaningful exposure to the upside in the market, but which could also mean exposure to the downside.
“We have only achieved the significant progress we have made with British Sugar because of the overwhelming unity and support we have had from growers. More than 1,300, representing over 70% of the national sugar beet tonnage, have pledged their support for the vital role NFU Sugar plays in securing a fair sugar beet price for growers. Recently, hundreds of growers attended NFU Sugar meetings to voice their support, and well over 500 letters have been written by growers to their constituency MPs on this issue,” added Mr Sly.
