Negotiations conclude on new sugar beet contract
16/08/06

NFU Sugar has agreed a three year Inter-Professional Agreement for beet growers following several months of intensive negotiations with British Sugar.

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The negotiations also incorporate a range of options for growers affected by British Sugar’s decision to close two factories.

NFU Sugar board chairman John Hoyles said: “The backdrop to these negotiations was the radical price cuts agreed as part of EU sugar reform. The NFU’s approach to negotiating the new contract has therefore been equally radical.

“The result is a simpler and totally flexible contract offering tangible improvements and more transparency. An added dimension to our negotiations has been the need to address implications of British Sugar’s decision to close Allscott and York factories.

“As a result a range of options have been agreed borne out of discussions with affected grower ‘Focus Groups’. We have negotiated better terms than are on offer elsewhere in the EU and have achieved a menu of options which include compensation from the processor and freedom to trade contracted tonnage.

“Overall this deal forms a platform on which we can build a competitive, profitable British sugar industry for the future.”

The NFU negotiating team and advisers will be holding meetings around the country over the next two weeks to present the new contract in more detail and explain all the options available under the restructuring scheme.

Mr Hoyles said: “We’re still dissatisfied with the contracted beet price that the processor’s offering but it’s a significant advance on British Sugar’s original offer and compares favourably to the situation in other EU countries and the EU minimum of £17.50.

“We will continue to encourage growers to calculate their production costs accurately so they can determine whether the beet price continues to offer them an acceptable return on their farm. Among the NFU’s negotiating achievements are improved payment terms, full payment for sugar in crowns and freedom to trade contracted tonnage year round. We have also negotiated for the full transport allowance to be paid for the duration of the agreement. It will not be reduced as the beet price falls.

“It is unfortunate that the deal has been overshadowed by British Sugar’s announcement to close two factories but by requiring this part of our negotiation to be a prerequisite in reaching overall agreement between us on the new IPA, the NFU managed to increase the pressure on the processor to improve options and the level of compensation.

Notes:

1. NFU Sugar has agreed a final beet price for 2009 of £19/tonne. It will be linked to the wheat price and will include late delivery allowances. This new price equates to around 7.5 million tonnes or £11 million.

2. Contract terms for the new IPA remain unchanged. Beet prices will be 2006: £22.86, 2007: £20.28, 2008: £19.22 and 2009: £19 (linked to wheat prices for the first time, starting from £75 per tonne to £95 per tonne)

3. There will be no cuts to the EU Transport scheme. It will remain unchanged at £25 million.

4. Beet growers affected by factory closures will be given an extra year to grow for 2007 with £8 per tonne being offered to surrender contracts. NFU Sugar estimates this will affect around 1million tonnes.

5. Payment terms will change for the better seeing growers paid on the fourth Tuesday after delivery. This is a change from a set date once a month.

6. Beet contracts will be more flexible allowing growers to buy and sell contracts and grow on different plots from previous years.

7. Growers can contact the NFU Helpline for more information on 0870 066 1974

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