British Sugar and the NFU have released details of the 2021 sugar beet contract.
The headline details:
- 1 year £20.30 per adj. tonne
- 3 year £21.18 per adj. tonne
- Futures-linked variable price contract
- No Crown Tare deduction
- New sugar payment scale
- New Virus Yellow crop assurance scheme
- Change to late delivery bonus
I must emphasise that there is effectively no price change from the 2020 contract; the difference is only the change in the sugar scale and the removal of the crown tare. The prices still include the sugar market related bonus of 10% for the 1 year contract and 25% for the 3 year contract as previous years.
No crown tare deduction, up to the 2021 crop there has been a deduction of 6.61% for crowns, but not for 2021 and onwards. From harvest to the factory this has no effect on the crop or what you have been doing, the removal of the crown tares will however effect how your payments are calculated i.e. all growers automatically get a yield increase. Beet being delivered will still have to have the green leaf material removed, and there will still be the dirt tare deduction.
The new sugar payment scale has been aimed to pay the grower for the sugar they grow, so if you general have low sugars this will help you, but if your sugars are normal high you will be worse off.
- Low sugar at 15%, 1t of clean beet equates to 0.915t on the old scale, 0.9375t on the new scale, £0.46/t better.
- High sugar 19%, 1t of clean beet equates to 1.25t on the old scale, 1.1875t on the new scale, £1.27/t worse.
With these changes all existing growers will receive an increase on their contacts of 3.4% extra permanent tonnage; this has been put on to take account of the increase yield due to the removal of the crown tare.
Virus Yellow Crop Assurance scheme, this is a £12m fund spread over 3 years to compensate growers if they get a yield reduction from Virus Yellows.
- Starts at yield losses over 10%
- Only pays out for losses between 10 to 35%
- Only pays for up to 45% of the loss
There are a number of conditions to this scheme, not least area drilled in relation to growers average yields, and plant populations ref NFU presentation on the 26th August. But the question to be answered is, What caused the yield loss, was it Virus Yellows? It could have come from drought, seedbed conditions at drilling, incorrect insecticide usage.
Late delivery bonus, this is now being changed to a single rate of 0.162% per day from 26th December compared to the current which has a further increase in March.
Seed, there are more options this year again with 8 varieties removed and 5 added to the list, new seed treatments and prices are down on last year. There are 2 varieties this coming year with ALS resistance but the cost is much higher price than standard and to be brought as a companion pack with the herbicide, these will be in the region of £475 per ha including the herbicide.
So, in a year when achievable delivered feed wheat prices are above £140 per tonne. The question is should I grow or not?
Using British Sugar figures, sugar beet has a good net margin compared to other crops especially other broad acre break crops. But this is taking the 3 year contract higher beet price and an average late deliver payment, so a beet price of £22.06 which will be unachieved by many growers.
When you start to factor in other hidden or at time not so hidden costs it can make beet look less favourable.
Things to consider before heading down the sugar beet crop route
- Harvesting contractor charges
- Drilling Contractor charges
- Yield loss of following crops
- Damage to soil structure
- Damage to tracks and infrastructure
- Other break crop option
Looking at our client’s data, for 2019, please see below, the gross margin is good compared to the other break crops but a gross margin is very different to a net margin.
|Average yield (t/ha)
|Average Price (£/t)
Haulage, with British Sugar offering a no cost option to all growers, this effectively set your haulage cost to be no more than your transport allowance otherwise you should be on the scheme. Within the scheme it also offers growers to be allocated a harvesting contractor which is generally at a lower cost than normally, last campaign the rate set by British Sugar was £192.74 per ha, but this is not as straight forward, with lifting you need to use the most cost effective harvesting contractor which is made of cost per hectare and how good is the job they do.
With average costs, you could see a return as follows,
* includes variable costs, drilling, harvesting and casual labour.
This has been based on 2 thirds of the tonnage on the 3 year contract and all the crop delivered before Christmas with on late delivery bonus. The point to remember is that it normally cost the same to grow a high yielding crop as a low yielding crop.
Looking at these figures it shows that yield is key, once you get down to the lower end of the yield scales it becomes very much an also run with other break crops, especially if you have to factor in lower following crop yields.
Whether to grower or not comes down to yield and soil type, if you can get an above average yield combined with sensible loading access it will pay, it’s a good spring crop offering another option for black grass control. If you’re a heavy land farm and the only lift option is December or January it will not work the yield loss on the following crop and damage done to your asset will outweigh the benefits. But every farm is different; every farm has different operational costs which need to be taken into account.
If you would like to discuss this in detail and see how it fits to your farming business please do not hesitate to get in touch.
Will you be growing sugar beet?