British growers will be able to manage and fix their own sugar beet prices with the launch of the sector's first ever pricing platform.
The new futures-based contracts has been agreed between NFU Sugar and British Sugar as part of its latest contract offer.
A group of growers will initially test the pricing platform as part of a year-long pilot programme.
The intention will then be to roll it out more widely across sugar beet contracts.
The pilot will allow growers and British Sugar to price beet independently of each other for the first time ever.
This means growers can lock in prices when it is attractive to them and British Sugar will only have to pay the price that they have independently set.
The platform has been developed by NFU Sugar, with support from British Sugar, and has been delivered by the supply chain service company Czarnikow.
NFU Sugar board chairman, Michael Sly explained the project took a number of years to develop, following calls from growers for more control over sugar beet prices.
He said: “Growers will be able to see the live value of the sugar they are growing in their crop for the first time ever and make independent pricing decisions based on that data.
“This can be a win-win for the industry. It will give growers flexibility to lock in attractive prices at a time to suit them and take the opportunity and risk the market offers them into their own hands.”
British Sugar’s Peter Watson said the sector recognised the desire in some growers to take more risk and price their own crop.
"This years’ pilot scheme is truly innovative for the sector with growers able to take positions on the sugar market for a proportion of their crop, much in the same way as other cereals crops. An exciting opportunity for all in the future.”
Growers involved in the pilot have the option to transfer up to 10% of their contracted beet tonnes from the traditional fixed price contact to the variable priced contract.
This contract will be set by a formula directly linked to the No. 5 sugar futures market.
As the programme grows, Czarnikow envisions larger percentages of crops having the flexibility to opt out of fixed prices.
According to Jonathan Williams, director at the firm, independent pricing is going to increase in volume and sophistication in future years.
“We are confident growers and British Sugar will both benefit by taking direct control of their own price management," he said.