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The two parties had been locked in an increasingly acrimonious negotitation since May

Sugar beet farmers and the sole buyer of their produce, British Sugar, have ended their long-running dispute and agreed on a contract price for the 2024/25 crop.

The Associated British Foods-owned processor has been locked in protracted negotiations with growers, via their collective representative NFU Sugar, since May.

Talks have collapsed on several occasions since the summer, with the two parties warning of the need to enter a costly arbitration process earlier this month.

However, a deal was finally struck yesterday, with the two parties agreeing on a £40 per tonne fixed price (as per the 2023/24 price) alongside a core price of £38 per tonne plus a market-linked bonus.

A futures-linked option – seen as a key stumbling block in negotiations – has also been agreed for up to 35% of growers’ contracts, with farmers also eligible for a yield protection element at a £1 per tonne reduction on the core or fixed contract price.

Further elements for growers, ranging from a cash advance option, late delivery allowance, local premium, and frost insurance are the same as the BS contract for the current 2023/24 crop.

Sugar beet growers had been calling for an improvement on the £38 per tonne fixed price BS had initially offered, with the NFU arguing the global sugar market was buoyant, and therefore warranted improved returns for its members.

The farming union – which is mandated by Defra to represent growers in negotiations with BS due to the sugar beet sector’s status as an effective monopsony – has spoken of its frustration during negotiations on a number of occasions this year.

Defra was forced to intervene last month in a call for the sector to follow “well established” price negotiating practices after British Sugar incensed the NFU by making direct approaches to farmers.

Explained: Sugar farmers furious over British Sugar monopsony

A failure to agree on contract terms for the 2024/25 growing season could have led many growers to ditch the crop and force BS to have to import raw cane sugar to fulfil its sugar supply obligations to customers – something that would have had big implications for the processor in terms of cost.

Following what became an increasingly acrimonious negotiation, the two parties have also agreed a shortened negotiation timeline, which will deliver a final price and contract earlier in the year next year.

“I am pleased that we have reached a contract offer for the 2024/25 growing season with NFU Sugar,” said British Sugar MD Keith Packer.

“We believe this offer represents great potential for growers and shows the long-term commitment British Sugar has to our homegrown sugar industry,” he added.

“This negotiation has been my first as MD of British Sugar and I want to make sure that in the future we all do better for our growers. This is why it was important to agree a shorter timeline which will allow both ourselves and NFU Sugar to negotiate to a conclusion for an offer to be with growers by 30 October. The changes we have made will ensure that this is in place for next year’s negotiations.”

Michael Sly, chair of the NFU Sugar Board, thanked growers “for their overwhelming support of NFU Sugar in these very difficult negotiations”.

He added: “It should be clear to everyone that grower unity with NFU Sugar has delivered this deal.

“We will continue to work tirelessly to ensure that our industry is modernised and growers always receive a fair share of the value of the sugar that comes from their beet.”