Beet price below standard
Südzucker invokes anger from Polish growers
There is a lot of confusion within the Polish beet cultivation. At the end of January, the German beet processor Südzucker published the contract for the 2017-2018 season. According to growers, it is below average. They do not agree with the basic price and conditions. However, there is more to the anger of farmers.
At the end of January, the Polish branch of the Mannheim Südzucker published: Sudzucker Polska SA the new contract for the 2017-2018 season. This immediately drew the ire of growers. Südzucker uses the sugar price as a reference for the beet price paid. At a sales price of 300 euros per tonne for sugar, Südzucker pays out a beet price of less than 17 euros per tonne. 16,63 euros to be exact. Polish growers are furious about this.
16,63
euros/ton
In the first version of the contract, Südzucker even calculated with an average of 18 percent sugar for the beets delivered. The bottom price then came to 19 euros per tonne. In the meantime, it has already dropped that requirement and Polish growers are rejected on 16 percent sugar. If we look at the current sugar price in London, it is around 500 euros per tonne. According to the Südzucker contract, that means a beet price of around 27 euros per tonne. Another rule in the contract that the growers have to deal with is the date of payment. It has been moved to June 30, 2018.
The Polish Association of Beet Growers has now asked Krzysztof Jurgiel, the Minister of Agriculture, to help. Other agencies are also being asked for help. During a visit by Chancellor Angela Merkel to Warsaw on February 7, the growers' organization demonstrated with banners in front of the government building.
Apart from the very low beet price and the delayed payment date, there is more to the protest of the Polish growers. The Polish branch of Südzucker, which has five factories in the south of Poland, is the only beet processor in this part of the country. Growers therefore have no alternative but to supply the Germans.
In addition, Südzucker is a member cooperative in Germany. The better the company farms, the higher the payout price. However, the Polish branch is a 'spóÅ‚ka akcyjna' or: a public limited company. So from a minimal price in Poland, all German beet growing members get better, but not the Poles. And that goes for the neighbors to the east.
If Südzucker sticks to the current price system, there is a good chance that many beet growers will sow no or fewer sugar beets in 2017 and will opt for summer grain or grain maize. With the current grain prices, the returns are low there, however, the risks are small and an expansion requires little adjustment to the company strategy.
Niels van der Boom
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
