NFU warns sugar sector 'uniquely exposed' to global market shocks

Sugar beet growers are warning of a deepening financial squeeze as rising fuel and fertiliser costs collide with weak global sugar prices and growing disease threats.

NFU Sugar Board chair Kit Papworth said producers were “uniquely exposed” to market shocks linked to the conflict in the Middle East, which has driven up energy-related costs across farming.

The warning comes as around 750,000 tonnes of sugar beet were placed on “contract holiday” for 2026, with many growers questioning whether the crop remains financially viable ahead of negotiations over the 2027/28 beet contract with British Sugar.

The arrangement allows growers to temporarily stop growing beet while retaining the option to return to production in 2027.

“These are growers for whom beet is a critical part of the rotation, but who simply can’t afford to grow at current prices,” Mr Papworth said.

While arable farms across the UK are facing higher production costs, he said sugar beet businesses were also dealing with a global sugar market currently in surplus.

“As beet growers, we’re exposed to the same challenges facing arable enterprises the length and breadth of the country in relation to fertiliser and fuel,” he said.

“But we’re also uniquely exposed… to a world sugar market in surplus.”

Growers are also facing increased pressure from aphid numbers and Virus Yellows, a disease spread by aphids that can significantly reduce sugar beet yields.

Mr Papworth described the upcoming contract talks as “unquestionably… very difficult”, warning that rising production costs meant “something has got to give”.

Sugar markets have remained weak despite gains in commodities such as wheat and oilseed rape since the conflict began.

Industry analysis has also highlighted growing financial pressure across UK agriculture more widely.

Consultancy Andersons recently warned agricultural input inflation had reached 8.4%, while farmgate output prices had fallen 5.8% year-on-year, leaving many producers squeezed between rising production costs and weakening returns.

Broader economic concerns have also emerged, with the Bank of England recently identifying agriculture as a sector facing “elevated financial stress” amid wider global market disruption linked to conflict in the Middle East.

The Bank’s latest business conditions summary placed farming alongside hospitality, retail and construction among sectors experiencing growing financial strain.

Concerns are also growing over both the price and availability of key farm inputs.

Mr Papworth said some growers had not secured fertiliser supplies before prices surged and warned the industry needed greater transparency to help businesses plan ahead.

“We absolutely need greater transparency to enable effective decision-making going forward,” he said, adding that Defra should consider suspending fertiliser import duties to ease pressure on farms.

Fuel prices have also risen sharply, with red diesel and road diesel reportedly increasing by around 30% and 40% respectively.

Some growers are now being forced to buy fuel without knowing the final price in advance, making farm budgeting increasingly difficult.

Mr Papworth said there were already reports of farms borrowing fuel supplies from neighbouring businesses to keep machinery operating.

With harvest approaching, he warned reliable fuel supplies would be critical for tractors, harvesters, dryers, lorries and cleaner loaders during the sugar beet campaign.

In a direct appeal to ministers, Mr Papworth urged the government to support domestic food production during the ongoing uncertainty.

“Food security is national security,” he said.

“I would urge it to be prepared to take all necessary steps to support farming and food production at this critical time.”

The warning comes as UK farming businesses continue to face rising production costs, volatile global markets and increasing pressure to maintain domestic food supplies.