Select Committee on Environment, Food and Rural Affairs Written Evidence


Memorandum submitted by J & H Bunn Limited (O49)

1.  SUMMARY

  This is a submission from J & H Bunn Ltd, an independent fertiliser manufacturer and distributor of agricultural fertilisers throughout the UK. The company is headquartered in Great Yarmouth and employs over 200 people with annual sales of £80 million. We recommend that the UK agriculture must continue to be able to grow sugar beet economically by retaining the EU's Option 1 from 2006. This submission attempts to quantify the effect on our real-life manufacturing business should this not occur. The supply of sugar beet fertilisers in East Anglia, Lincolnshire and East Yorks is the cornerstone of our retail business and the ability for farmers to grow sugar beet in UK gives our company scale and contributes heavily to our business. Compared with other arable crops, sugar beet requires relatively high amounts of fertiliser so has a disproportionate effect on the scale of our business. Should beet become uneconomic to grow and fertilisers therefore not demanded by growers, the direct impact on our business would be a devastating blow of at least 60 jobs and nearly £5 million sales in our firm, which is based in an Objective 2 area. The effect of the cessation of sugar beet growing would also have significant knock-on effects on our key suppliers (most of whom are also located in EU Objective 2 areas in the North East of England). A decision to render sugar beet production uneconomic would not just affect the rural East Anglian economy. Downstream effects would be felt in some of the UK's less-favoured industrial heartlands too.

  Members will probably be unaware of the complexity and competitiveness of the sugar beet fertiliser market. This submission details how the sales and distribution process for sugar beet fertilisers also helps deliver other Defra policy objectives, particularly environmental monitoring, agronomic efficiency and the sustainable use of fertilisers. We are sure that submissions from others will identify strong macro-economic and environmental benefits arising from the growing of sugar beet in this country. Others will depict the current policy as undefendable.

  Our position is that we see no point in destroying a UK sugar industry and its allied trades when there is strong UK demand for sugar of which the UK can only produce 50%. The alternative to the existing regime is likely to lead to the wholesale destruction of virgin land to grow cane-sugar in non-ACP countries.

  We are strongly in favour of retaining Option 1.

  If Option 2 is favoured, we recommend a price reduction no greater than 15%, small enough to ensure that sugar beet production in the UK will still be economic to grow. Members should appreciate that an Option 2 that makes UK sugar beet production uneconomic is really Option 3 by stealth.

  Option 3 totally unacceptable as it would destroy our own business, would damage the viability of agriculture in our region and on a world-stage will lead to the abandonment of ACP countries with favoured access to EU sugar markets in favour of LDCs with no existing sugar infrastructure.

2.  THE ECONOMIC IMPORTANCE OF SUGAR BEET AND SUGAR BEET FERTILISERS

2.1  Company Profile

  J & H Bunn Ltd are independent fertiliser manufacturers and agricultural merchants based in Great Yarmouth since 1816. The business now operates 15 production facilities across the UK from Montrose, along the east coast, the West Country and Cornwall. Over 200 people are employed in the business. The group turnover is over £80 million per annum. At our headquarters, a £2 million payroll contributes to the Great Yarmouth economy, an Objective 2 area. In turn we trade with other organisations, for example the Great Yarmouth Port Authority, of whom we are their largest customers. Our own customers are primarily farmers and merchants or farmer controlled-businesses who in turn sell direct to farmers.

2.2  The Importance of Sugar Beet Fertiliser to our Business

  The sugar-beet season provides a solid base and a rhythm to our business: In the late autumn and winter, the main focus of our business is the manufacture, distribution and contract application [picture of Ship, Bulk Lorry, BigA] of fertilisers to sugar beet fields. Compared with other arable crops, sugar beet requires relatively high amounts of fertiliser so has a disproportionate effect on the scale of our business. These fertilisers are manufactured at Great Yarmouth and to a much lesser extent in Kings Lynn, Sharpness in Gloucestershire and Howden in East Yorkshire.

  Owing to the large sugar beet growing areas, in East Anglia our business is heavily vertically integrated and we operate our own stevedoring, production, distribution by lorry and contract-application via a fleet of self-propelled fertiliser spreaders from Great Yarmouth.

  Directly attributable turnover and staffing for the sugar beet fertiliser enterprise is approximately:
ActivityTurnover (£ per annum) Staff (number directly employed)
Stevedoring100-150K 5-6
Sales and Manufacture3,500,000-4,000,000 25
Distribution250,000 15
Contract Application500,000 15
Total4,300,000-4,800,000 60


  Should beet become uneconomic to grow, the direct impact on our business would be of 60 jobs and nearly £5 million sales in our firm, which is based in an Objective 2 area.

2.3  The Importance of Sugar Beet Fertiliser to our Suppliers

  Most sugar beet fertilisers are UK-sourced from companies that also happen to be based in Objective 2 areas in the North East (eg Cleveland Potash at Redcar and Terra Nitrogen in Middlesbrough). Rock salt is a sugar beet fertiliser and is mined in Cheshire. Imported fertilisers like "Kainit" are mined from special deposits in Germany and are transported to the UK by ship. Unlike synthesised agrochemical sprays, most of the constituents of sugar beet fertilisers are dug out of the ground from natural ore deposits and require minimum processing (eg crushing) before they can be blended together and used as sugar beet fertilisers.

  We trade locally too and we use the Great Yarmouth Port Authority, a trust port extensively. Alex Woods, General Manager, tells us that Bunns are largest the port user importing 250,000 tonnes over the quay annually.

  A decision to render sugar beet production uneconomic would not just affect the rural East Anglian economy. Downstream effects would be felt in some of the UK's less-favoured industrial heartland too.

2.4  The Effect of Option 2 or Option 3 Sugar Beet Reform to Farmers

  For historic reasons, our business also runs a small farm which grows sugar beet so we are farmers too. Our own farm suffers from low rainfall and yield potential so our cost of growing is higher than normal at £26 per tonne of sugar beet. An Option 2 that delivered a sugar-beet on-farm price less than this would make production in our real-life case uneconomic. The sugar beet price is currently £30-32.

  The maximum acceptable reduction in sugar beet price is 15%. An Option 2 that delivered a sugar beet price in the range £18-28 would drive our own farm and others away from sugar beet production.

3.  OTHER POLICY IMPLICATIONS

3.1  Environmental and Sustainable Agriculture: The Soil Analysis of Each Field for Fertility

  It is a Defra requirement that farmers analyse their fields every four to five years for soil fertility. It is the custom and practice that every field that will receive sugar beet fertilisers has a Soil Fertility Analysis Report conducted by an independent laboratory. The resulting analysis report identifies the base-fertility so the correct fertiliser can be "prescribed" for each field. Thus, the sugar-beet field prompts the farmer to comply with best-environmental practice. As a company we undertake well over 10,000 samples per year at a cost to our business well in excess of £100,000 pa.

  Best practice is not just a question of blanketing each field with a standard fertiliser. Members may be surprised to know that every beet field frequently has a different custom mix of fertiliser applied according to Defra recommendation tables to optimise crop performance with minimal excess use of nutrients.

  In our business, 15 people rely on their employment for the technical sales and advice relating to sugar beet fertilisers. In addition, a similar number are employed by merchants and farmer-controlled businesses.

4.  PRACTICAL EFFECTS IN OUR BUSINESS

4.1.1  Production

  The majority of Sugar Beet fertilisers are blended together in a giant mixer from as many as 10 different granular raw materials. Remarkably, we sell more than 2,000 "standard" recipes for sugar beet fertilisers each containing a different combination of plant nutrients. This is a sophisticated and well-developed market.

  There is a small market for liquid suspension fertilisers able to use the fine dust-fertiliser separated by sieve and which is unsuitable for granular application (it blows away in the wind if spread) so the re-use of this dusty by-product in liquid fertilisers has an enormous environmental benefit by avoiding disposal in landfill. In our business, 25 people rely on their employment in the sales and production of granular and liquid sugar beet fertilisers.

4.1.2  Distribution

  As every field may have a unique mix, specialist bulk transport with custom-design partitioned trailers are employed. The value of sugar beet haulage is at least £500,000 per year and we have invested £120K in specialised equipment just this year. In our business, 15 employees (drivers, traffic staff, billing etc) rely totally on the sugar-beet fertiliser haulage for six months of the year.

4.1.3  Contract Application

  We operate a comprehensive fleet of self-propelled fertiliser spreading machines. The machines use the latest satellite guided technology with forward speed control ensure even application of fertiliser . . . important for the crop and also to prevent excess application. This hi-tech response helps place what fertilisers are required in the correct place polluting watercourses, hedges or ditches.

  In our business, 20 people are employed in this enterprise that derives 80% of its income from sugar beet fertiliser application.

5.  COMMENTARY ON THE SUGAR BEET FERTILISER MARKET

  This submission demonstrates that the UK sugar beet fertiliser market is technically advanced, is economically driven and environmentally responsible and helps the farmer end-user deliver other Defra policy objectives regarding frequent fertility monitoring and the sustainable avoidance of waste.

  Our business relies on the sugar beet fertiliser market to provide scale to our business. It directly supports 60 jobs and £5 million sales.

  As well as supporting the rural farming economy, sugar beet fertiliser production disproportionately helps supports firms in Objective 2 areas in the industrial heartlands outside traditional rural areas.

6.  OUR RECOMMENDATION

  We are strongly in favour of retaining Option 1.

  If Option 2 is favoured, we recommend a price reduction no greater than 15%, small enough to ensure that sugar beet production in the UK will still be economic to grow. Members should appreciate that an Option 2 that makes UK sugar beet production uneconomic is really Option 3 by stealth.

  Option 3 totally unacceptable as it would destroy our own business, would damage the viability of agriculture in our region and on a world-stage will lead to the abandonment of ACP countries with favoured access to EU sugar markets in favour of LDCs with no existing sugar infrastructure.

31 March 2004


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2004
Prepared 12 July 2004