Sweeten the pill for UK beet growers?
Despite sharply reduced prices, UK Sugar beet growers are more than capable of staying in the game, providing they embrace change, says David Bolton of Andersons East.
“At Andersons in the centre of East Anglia we have kept a close eye on the Sugar beet Regime negotiations and the industry is moving rapidly towards significant and sudden change, not least of which is the predicted price cut from €632 to €385 per tonne. In pounds Sterling, a drop to £23.17 in 2006 through £21.54 in 2007, £19.91 in 2008 to a figure of approximately £17.95 per tonne in 2009 is expected. But speaking to our growers, it appears that the majority will survive, providing they introduce agronomic and management changes to optimise their production,” says David.
The impact of sugar beet price reductions on farm businesses will be complex. But knee jerk reactions involving input reductions will be wrong. Careful analysis of the major fixed cost elements including land, labour and machinery is required as well, advises Mr. Bolton.
According to Andersons East, some administration will be necessary in order to reduce these costs. Crop recording, care over income and an accurate knowledge of time used, machinery committed and the cost of its provision is essential. Any future re-adjustments require a base knowledge for their starting point.
David Bolton has also looked at modules of least cost production. “Crucial to profitability is the scale of the ultimate operation. Ideally a beet enterprise should be sufficient for a single harvester size, if a club is formed, or smaller if services are to be hired in.
David points out that sugar beet has always been a tonnage contract but too often the yield has not been matched to the area properly. “Our survey of growers indicates that they should be selecting the most productive land available for efficiency and ease of ultimate delivery to factory. Previous and future cropping to time lifting to best effect should also be considered.”
The suitability of land, its quality and its cost also need addressing. Norfolk growers, who are responsible for nearly 40% of the UK sugar beet production, are moving towards rectangular shapes within fields as being more suitable for both beet and cereal growing. This leaves headlands to benefit the environment or even as fallow. With the price of beet dropping, rents associated will drop over time as well, advises David.
Undoubtedly grower cooperation will be key to a successful UK beet industry. Growers should consider with whom they can work and then club existing resources together. It is important to get rid of all surplus and unreliable equipment to reduce costs. Second-hand ownership of a substantial machine shared with a neighbour is workable too, advises Andersons East.
“It is also important to appoint a dedicated leader of the beet team. He can co-ordinate field planning, oversee drilling, harvesting and the logistics of movement. Skilled manpower is necessary on modern high performance machinery. It is tiring, driving a six-row harvester many hours per day and over weekends too during the campaign. These arrangements leave spraying and fertilising, if desired, outside the group.”
Central buying should provide seeds, fertilisers and sprays at more competitive rates and larger drops are logistically attractive to suppliers too. Proper disease control, particularly mildew, will benefit yield significantly and modern inputs in general are powerful tools for growers.
“Our survey of growers’ performances over the last ten years shows a steady increase in yield per hectare, in excess of one tonne per hectare per year. Our evidence also indicates that yields over 70 tonnes per hectare are quite achievable but it takes attention to detail to average more than this. The top 10% already do. Higher yielding Rhizomania resistant varieties allied to modern management skills taken altogether can partially, though not totally, restore the Old Regime’s profitability at much lower prices. This too is before beet goes into ethanol production too!”
David Bolton explains the need for sugar beet reform. “Since 1968 Europe has enjoyed an increasingly sheltered Sugar Regime. After de-coupling of subsidies in 2005, sugar beet has briefly become the most profitable crop for arable farmers. The “Old Scheme” had guaranteed prices, intervention, tariffs, quotas and export subsidies. Conformation with the Everything But Arms Agreement and a changing WTO environment has required this mismatch to be corrected. A production surplus of five million tonnes must be eliminated to bring supply and demand closer in line in Europe. Export subsidies are effectively forbidden and EU consumption is more likely to fall than rise. The result is a four-year self-financing restructuring scheme to help growers and processors rationalise or close their operations.”
“The common sense reaction will be for European producers in the least suitable growing areas, both North and South, to cease their production entirely or at least substantially. Efficiency and competitiveness directs production to the central belt where climate, soil conditions, economies of scale, ability and investment levels permit continued activity nearer to factories. Ireland has already announced closure of its only plant,” reports David.
