Bitter sugar dispute ‘could be resolved by government’

The government says it will intervene unless British Sugar and beet growers resolve their increasingly bitter price dispute – but only as a last resort.

It follows deadlocked price talks for the 2024 beet crop which saw the processing giant bypass formal negotiations with NFU Sugar representatives and issue a unilateral contract offer of £38/t direct to farmers.

British Sugar agriculture director Dan Green said: “As well as a high fixed price element, we have built in a mechanism which allows us to pay a market-linked bonus and share any possible upside if sugar prices remain high.

“This would deliver over £40/t in today’s sugar market.”

Despite its best endeavours and months of talks, British Sugar said it had  been unable to agree a deal with NFU Sugar. Negotiations would continue but growers needed the financial security of a contract and a guaranteed price as soon as possible.

“We are confident that this offer is extremely competitive, making beet the most profitable crop on farm and will ensure it remains an attractive crop for growers across the East and East Midlands,” said Mr Green.

Outrageous

NFU Sugar chairman Michael Sly said he was outraged, accusing British Sugar of circumventing the negotiation process. He added: “NFU Sugar has not agreed this offer, leaving the validity of any contract made in relation to this offer in doubt.”

Calling for an urgent intervention by Defra farm minister Mark Spencer, Mr Sly said the government should make it clear that contracts formed on the basis of British Sugar’s unilateral offer would be invalid.

In response, a Defra spokesperson said: “Defra has had further discussion with all parties. The government recognises the importance of sugar beet farmers and their vital contribution to UK sugar production.

“We are committed to promoting fairness across the food supply chain, with risk and reward being properly shared. That includes seeing a price agreed for sugar beet that benefits both growers and processors, in the context of the global market.”

Despite British Sugar’s unilateral contract offer, it remained important that both sides continued to follow the formal negotiation process and reached a mutually acceptable outcome, said the Defra spokesperson.

“There is a well-established process in place to agree the sugar beet price; designed to be independent between both parties, with government only acting as final arbitrator at the end of the process should no agreement be reached.”

Growers were given just five days to accept British Sugar’s offer – prompting Brown & Co consultant Charles Whitaker to suggest that the processor was seeking to maximise its own profits and minimise grower returns.

The offer on 1 November – to be returned by 6 November – was below the world beet price equivalent of £50/t and rising, said Mr Whitaker. It was also lower than contracts worth €50-55/t which were being offered to growers in the European Union.

Long-term future

A “fair, sustainable price reflective of the sugar market opportunity” was needed, said Mr Whitaker. It would enable them to invest in the long-term future of UK sugar beet – and grow the size of the crop with British Sugar to reduce sugar imports.

The annual beet area has declined in recent years due to low prices and higher costs. This has seen sugar brought into the UK this year at far higher equivalent prices than those paid to UK growers.

Prices of £22/t in 2021 and £27/t in 2022 led to £40/t being agreed for the 2023 crop to rekindle interest in what was now seen as a “risk” crop – with weather, virus and fungal disease decimating yields in two of the last four years, said Mr Whitaker.

In a show of strength, some 550 growers attended an emergency online meeting called by NFU Sugar. They rejected the British Sugar offer in favour of holding out for a higher price which would  better reflect the buoyant global market.