London, Jan. 4 - British Sugar and UK farmers have agreed to raise beet prices for 2008 and 2009 in a price formula linked to current feed wheat prices and the euro exchange rate, British Sugar said in a statement to growers on Friday.
At the current feed wheat price and a euro exchange rate of 0.72 pounds, the beet price received by farmers is forecast to be about 21.00 pounds per tonne for 2008 and some 24.01 pounds for 2009, compared with a 2007 price of about 20.00 pounds.
The new price formula is intended to give farmers incentives to plant sugar beet instead of wheat, a British Sugar spokesman said.
Wheat prices have soared due to strong international demand and tight supplies. Agricultural commodities including wheat rose to multi-year highs on Thursday after crude oil's surge to a record $100 per barrel as traders anticipated higher demand from the global biofuels industry.
"We understand that growing sugar beet has to be attractive compared to other crops," said British Sugar UK managing director, Gino De Jaegher.
"Linking the beet price to wheat values in this way clearly demonstrates our commitment to ensuring that sugar beet remains competitive allowing growers to plan ahead with confidence."
"While British Sugar has indicated that it expects the recent, unprecedented wheat prices to return to more normal levels, it has agreed a mechanism for 2009 to link beet pricing to wheat up to a wheat ceiling of 150 pounds per tonne," De Jaegher said.
"At a possible wheat price of 130 pounds per tonne and a euro exchange rate of 72 pence, the beet price would be 22.51 pounds per tonne (for 2009)."
British Sugar is the UK's leading supplier of the sweetener and a subsidiary of Associated British Foods.