British Sugar (BS) is forecasting UK 2022/23 beet production to be the lowest for 47 years. The processor has reduced its production forecast for the current campaign down to just 740,000 tonnes from 1.03 million tonnes in the previous year. We reported in a previous article that the frost industry insurance had been triggered and that loads had been rejected due to damage. Even though average UK yields look similar to the poor campaign in 2020/21, production is set be 18% lower due to a smaller planted area. This year circa 87,000 hectares of sugar beet have been planted compared to about 104,000 hectares in the 2020/21 campaign.
Furthermore, due to the reduced production, it is reported BS is having to look at alternative sources of sugar from around the world, suggesting it has already sold more sugar than it is expecting to produce; this however, is likely to cost much more than what it will have contracted to sell it for. The problem is European supplies are also very tight due to the area there also declining; this will be the fifth consecutive year of decline and although the frosts were more of a problem in the UK, yields on the continent have also been impacted. Spot prices across the continent are around €1,000 per tonne with duty-paying sugar having to be imported. BS is unlikely to be able to source enough sugar from Europe, and world market white sugar, with £350 per duty on top of any freight costs is likely to cost well in excess of €1,000 per tonne, meaning any imported sugar BS has to buy to service contracts already agreed for 2022/23 is likely to cost substantially more than the processor will have sold it to customers for.