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‘It’s the end of the road’: UK’s sugar beet farmers face rising pressures

‘It’s the end of the road’: UK’s sugar beet farmers face rising pressures


Tom Wright’s family grew sugar beet on their mixed farm near Moulton St Mary in Norfolk for more than a century, but this year they have planted none.

“We’ve considered the future of the crop very carefully over the last 10 years, and we know that at the current prices it’s not making money any more,” Wright said. “It’s sad. My family have grown it for five generations, since 1912, and there have been bad times before, but now it really is the end of the road.”

Wright is not alone. After extreme weather and disease ravaged the 2020 crop, some farmers have given up beet growing and others cut back, leading the National Farmers’ Union to predict a fall of 10 per cent to 15 per cent in the area planted in 2021 and warn of potential further cuts in future.

The British sugar beet sector, which produces more than half the sugar consumed in the UK, has also been hit by pricing pressures in part due to EU deregulation four years ago.

All of these factors have led to tensions between farmers and their sole buyer British Sugar, the only processor of UK-grown sugar beet.

Tom Wright
Tom Wright: ‘My family have grown it for five generations . . . and there have been bad times before, but now it really is the end of the road’

In an attempt to help growers hit by virus yellows, the disease that has blighted the crop, the company, a division of Associated British Foods, launched an assurance scheme for growers. But in a tense emergency videoconference in March, farmers told management that it needed to do more.

“We do grow it at our own risk, but growers are looking for some kind of recompense for the sheer difficulties that 2020 brought, and also in the future more of a risk-reward mechanism to support [their] loyalty,” said Michael Sly, chair of the NFU sugar board.

Like others, Lincolnshire grower Andrew Ward argued the future of UK sugar production was at stake: “If they don’t pay more, it will be the end of the UK sugar industry.”

Paul Kenward, managing director at British Sugar, told the Financial Times it was “sobering to hear the individual stories of a very difficult season” and said the company would take farmers’ feedback on board.

Sugar production from UK beets dates back to the 1912 opening of a factory at Cantley, Norfolk. Now, about 3,000 growers across East Anglia and the East Midlands produce about 8m tonnes of sugar annually for British Sugar under contracts negotiated by the NFU.

It is a system different from other UK crops, and has its own quirky language, with the annual winter harvest known as a “campaign” in which beets are “lifted” from the ground.

Kenward said the UK sector has become highly productive: “You get more sugar per acre in East Anglia than you do in Brazil. Our factories are incredibly efficient too.”

Sam Wright
Tom Wright’s great-great-grandfather Sam Wright. The Wright family has grown sugar beet for more than a century

But in recent years the crop has been hit by virus yellows, which is spread by aphids. Farmers said the problem was worsened by an EU ban in 2018 of seed treatments containing pesticides called neonicotinoids, citing a risk to bees.

Member states could still choose to authorise emergency use but pre-Brexit the UK opted not to do so. The government this year gave permission in principle for its use, in a move condemned by environmental groups, although the industry will not use it in 2021 as weather projections indicate the virus will hit less severely.

Meanwhile, prices paid to growers have gradually declined, especially following the EU deregulation.

David Hoyles, a grower in south-east Lincolnshire, said: “The last few years have been more difficult: the price has come down and . . . if you get a poor year, it hits you a lot harder.”

Hoyles added: “With global warming we’ve seen a change in weather patterns, with hot dry spells and wet spells, more extremes, and that has brought other pests and diseases to the crop.” 

British Sugar has increased prices paid to farmers by 70p a tonne this year as global sugar prices rallied and after it reported improved profitability in the financial year to September 2020 “from the unacceptable levels seen over the two years after the abolition of EU sugar quotas in October 2017”.

But the company said the late 2020 harvest was hit by “truly exceptional” weather, including the wettest February since 1914 and driest May since 1868.

Hoyles said the combination of weather and disease caused a 61 per cent drop in yields and the NFU’s Sly put growers’ losses at £45m. Some are replacing beet with oilseed rape or oats.

Close-up of a sugar beet pulled out of the ground
Prices paid to sugar beet growers have gradually declined © Nathaniel Noir/Alamy

James Peck of PX Farms in Cambridgeshire said he started growing sugar beet eight years ago and was the country’s third-largest grower, producing about 82,000 tonnes. But he stopped after losing £640,000 on the 2020 harvest, even though he valued sugar beet’s role in crop rotation, helping to control weeds.

British Sugar said plant breeders are working on varieties that would resist virus yellows. It also hopes the disease can be fought using gene editing, in which DNA sequences are deleted, modified or inserted.

The UK government is consulting on taking a more liberal approach to gene editing than the EU. This would be “the closest thing to a silver bullet” for virus yellows, said Kenward.

British Sugar has left the door open to improved deals with growers. “We are very optimistic for the growing season to come, and I look forward to putting this crop behind us and embracing the many opportunities the industry has to grow profitably together,” Kenward said.

Farmers such as Wright and Peck, however, are looking elsewhere. Wright said his family’s decision to stop growing beet has caused a stir locally because his farm is just four miles from the Cantley factory.

“We’re in an area of historic growing where every farm has grown sugar beet, and we’re one of the first in our immediate area to stop. It’s quite a big thing,” he said.



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Photographing an era of car culture

Photographing an era of car culture

It’s a book more than four decades in the making — spurred on by the pandemic. “I carried around the idea of the book for years,” said photographer Thaddeus Holownia, the creative mind behind “Headlighting 1974 – 1978.”

Soon to be released, it features portraits of everyday people with their cars. Like the title suggests, Holownia captured these photos between 1974 and 1978, but he did so without thinking he would compile them into a book. That idea only came later.

At the time he was taking the images it was the heyday of automobile manufacturing. “That certainly had an influence on my thinking of being aware of the mechanical age and people’s relationship with their cars,” said the visual artist, publisher and teacher.

Holownia didn’t know it at the time, but he was capturing a snapshot of car culture in the 1970s. He took photographs of about 50 people with their vehicles — everything from a custom Boat Tail Bentley to a Ford Model A and a Chevrolet Monte Carlo. There’s even a police cruiser: a 1974 Plymouth Satellite.

To take the portraits, he used a large-format 8-inch by 20-inch Gundlach Banquet camera — with a creative twist. “It’s an accordion box with a lens on one side and film on the other side,” he said. “I was pretty broke, so I started using photographic paper (instead of film), and the sensitivity of paper is much less sensitive to light so the exposures were done with a lens cap rather than a shutter.”

That meant he could only take four photographs at a time and then he’d have to find a dark room (often a motel bathroom) to reload. “I had to be very careful in what I chose to photograph — it’s a different kind of a process than what people are used to today.”

Because of this process, his subjects would embrace the moment and pose seriously with their vehicles, “so there was a very different kind of feeling about making those portraits,” Holownia said.

Some people posed behind the wheel, some in front of the car. One gentleman with a 1939 Packard limousine stood behind it because he didn’t want to ruin the lines of the vehicle.

“I let them pose however they wanted to,” Holownia said. “People loved their cars, and the process was a participatory process.”

This was also his first solid artistic venture into photos, and eventually he shared these works and went on to start a photography program at Mount Allison University, located in Sackville, N.B. It also meant he could now afford to switch from photographic paper to real film.

Recently retired, Holownia now spends his time at his studio in Jolicure, N.B., where he works on projects like “Headlighting.” Over the years, he’s shown these car images in Canada, the U.S., Mexico and Germany. “Wherever it’s shown, people love it and it’s gotten better with time,” he said, adding that these cars are now considered antiques. “As a group of portraits, it really defines an era of car culture.”

Holownia, whose photographs can also be seen in the National Gallery of Ottawa and the Spencer Museum of Art in Kansas (where many of the original photos were taken), started thinking about turning the exhibit into a book about 30 years ago. But it was during the pandemic’s rolling lockdowns that he decided to turn this vision into reality.

Everything about the book is an ode to cars. It’s spiral-bound, on bookbinding boards with black ink embossed directly into the boards. “It has this mechanical feel about it,” Holownia said. It’s also 12 by 18 inches, honouring the size of the negatives. “When you open it, it’s a two-page spread so it’s linear like a highway.” While he doesn’t name the people in the photographs, he provides the year and model of each vehicle.

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At the front of the book, there’s a self-portrait of Holownia with a friend next to their vintage GMC panel van and Studebaker R10 in Toronto’s Distillery District in 1974, when the area was still abandoned and run down. Now his photography from the same era is hanging in the Corkin Gallery in the Distillery — coming full circle.

The book will be distributed by Goose Lane Editions this summer or can be purchased at halownia.com.




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Three auto-themed products to splurge on this week

Three auto-themed products to splurge on this week

Precision timing

The Tread 2 wristwatch is made by former British specialty-car builder Devon Motor Works, which is now called Devonworks. The timepiece, available in several colours and models, uses four miniature motors attached to a series of drive belts that control the hour, minute and second readouts. All of the action, which is visible through the watch’s bulletproof-glass casing, is controlled by a battery-powered microprocessor. The cost of the watch starts at $12,500 (U.S.) and is available at devonworks.com.

A tent above

Montana-based Go Fast Campers claims its 35-kilogram hard-shell (both roof and floor) pop-up style Superlite Roof Tent is the lightest on the market. The 50- by- 90-inch (127- by- 238-centimetre) interior dimensions provide space for two adults and the side curtains that cover the interior mesh screens are made from polyester. When the tent is not needed, the quick-connect latches are designed for easy removal from the vehicle. The tent retails for $1,300, with $100 for the optional ladder and $299 for the mattress. More details can be found at gofastcampers.com.

Kitted out

Gearheads will love this Ford engine model kit from Makerhaus. This 1:3 scale model of the high-performance 289-cubic-inch V-8 that Ford installed in the first Mustangs moves via three AA batteries (not included). The cooling fan spins, the crankshaft turns, the pistons move up and down and the spark plugs appear to fire using red-tipped LED lights. There is even an electric sound module that produces a simulated engine growl. A collector’s manual covering the history of the Mustang V-8 is also included with the 200-piece kit. The model retails for $185.95 at makerhaus.biz.




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How do I create an emergency kit for my car?

How do I create an emergency kit for my car?

Having an emergency kit in your vehicle that you can rely on in an accident or roadside emergency should not be an afterthought, said Stephan LaLonde, a senior sales manager at CARFAX Canada. “Speaking for myself and my family, and it is a must. We always have an emergency kit in our vehicles,” he said. An emergency kit should include items related to your vehicle’s operation, the weather conditions you may encounter and your own safety. “A kit should be a year-round concern, but there will be seasonal additions to the kit,” LaLonde said. He added those items should remain in your vehicle throughout the year but if you do remove something you should replace it before the seasons change.

Among the kit items CARFAX recommends for your vehicle’s operation are jumper cables and a tire puncture seal and inflator. It is also suggested your kit include a folding shovel, ice scrapper, duct tape, road flares or a warning light, a road map, fire extinguisher and dry sand or kitty litter. “Kitty litter or sand is one of those things that will help you if you are in a situation where you need traction, like you are stuck in snow,” Lalonde explained.

Items to ensure your personal safety include blankets, winter hats and gloves, a flashlight and extra batteries, pen and paper, bottled water and energy bars or non-perishable food. A first-aid kit, whistle, roll of paper towels and a candle in a deep can with matches is also recommended. “If you are in your car, and it is 40-degrees below outside, that candle will create a little bit of heat,” Lalonde said. He added that people often forget to include a blanket. “When you get in an accident, if shock sets in, you want to keep warm.”

Lalonde said to store your kit where it makes sense for the type of vehicle you drive. It should also be accessible. “Most cars today have a folding back seat, so the trunk is accessible should there be an incident,” he said.

Many companies and organizations, including Home Depot, Canadian Tire and the Canadian Red Cross, sell pre-packaged kits. Each might include a slight variation on what is recommended as well as optional items, such as a seat belt cutter, tow rope or even an extra cellphone.




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The bright spot in strained bond markets

The bright spot in strained bond markets


Troubled companies are thin on the ground these days. That has been good news for investors in an important corner of the financial system.

Owning the debt of the riskiest companies in the US and Europe has provided positive returns so far this year for fixed income investors, a rare bright spot in the vast universe of publicly traded debt.

By contrast, holders of higher quality bonds sold by governments and companies have experienced negative returns during 2021. That has been driven by expectations of higher interest rates as inflation and economic growth pick up. As rates rise, existing bonds are less attractive to investors compared with new debt offerings.

The disparity in performance between high and lower quality debt may appear strange given that the overall rise in bond yields this year might be expected to hit strained companies more. An explanation rests in how markets behave once an economic recovery is under way.

As corporate default risk abates, shares and debt sold by so-called “junk-rated” companies with lower quality balance sheets rally sharply — as was seen in 2009 and 2003 when high yield appreciated sharply in value in the wake of defaults peaking and recessions ending.

“Default rates have fallen a lot and companies have refinanced their debt at lower rates and if we get the expected rebound in profits, high yield can hold up into next year,” says Adrian Miller, chief market strategist at Concise Capital, an asset manager specialising in small company debt. 

Indeed, this week, Fitch Ratings forecast a decline in the expected rate of speculative rated company defaults this year to 2 per cent from 3.5 per cent in 2021. The pace of defaults has eased markedly from a projected 5.2 per cent a year ago and is nowhere near the peak of 14 per cent seen in 2009.

With reduced fear of default, the higher fixed rates of borrowing that are paid by lower quality companies suddenly look attractive compared with the relatively meagre offerings by blue-chip rated bonds.

This week, BlackRock said demand for income in the high-yield market from investors contributed to their strong client flows during an impressive first-quarter performance by the asset manager.

The need for income helps explain another oddity about the current high-yield market. The risk premium or spread associated with owning the lowest quality credit has shrunk markedly versus that of US government bonds.

The spread has eased towards the lowest levels seen during the post financial crisis decade. Moreover, it has occurred after a record $140bn of junk bond debt was sold during the first three months of the year. Bank of America forecasts $475bn of debt sales in 2021, a 10 per cent increase from a record-breaking 2020.

The ability of companies to raise debt in such amounts and not send interest rates markedly higher reflects the seemingly insatiable demand for income by investors betting on defaults staying low with a robust global economic recovery in the wake of the pandemic.

Column chart of US high yield debt showing Fitch forecasts improving outlook for US corporate defaults in 2021

Still, the speed and extent of the rally in high yield debt does little to allay long term concerns that the credit market has run well ahead of underlying fundamentals for low quality companies.

It comes amid a low rate of capacity utilisation by US companies. In previous decades, this reflected plenty of slack in the economy and thereby indicated mounting challenges for companies. 

Marty Fridson, chief investment officer at Lehmann Livian Fridson Advisors, says there is hidden distress in the high-yield debt market. He says that even better rated companies have been pushed beyond fair value on the back of the huge support by the US Federal Reserve for markets and the flow of credit.

That Fed intervention should leave investors wary about the eventual longer term consequences. There remains considerable doubt as to the extent of the post-pandemic recovery beyond this year for indebted companies.

Fitch, for example, has a slightly higher 2022 default rate forecast than this year, “reflecting uncertainty around the sustainability of the demand recovery for some sectors”. This is partly due to the persistence of digital trends that has challenged a number of sectors.

Tracy Chen, portfolio manager at Brandywine Global, an investment boutique of Franklin Resources, says: “Business models will change after Covid and there are still a lot of companies being supported by accommodative policies.

“Stimulus and infrastructure spending is good for certain sectors. Longer term we are less bullish on high yield.”

This view reflects doubts as to whether stimulus provides some companies with a new lease of life, or delays an eventual debt reckoning.

“Prior to Covid, investors were very cautious about credit and talking about the end of the cycle,” says Chen.

“There is a case that a bigger default cycle has been delayed and that it occurs over the next 12 to 18 months, once the stimulus measures have ended.”

michael.mackenzie@ft.com

 



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Dalton Kellett entering 2021 IndyCar season with a new attitude

Dalton Kellett entering 2021 IndyCar season with a new attitude

To do just about anything well in life, be it journalism, politics or long-haul trucking, you need confidence that you can do the job well.

Dalton Kellett of Stouffville races cars for a living, Indy cars specifically. He is starting his second year in the big league, the NTT IndyCar Series, which opens its season tomorrow at Barber Motorsports Park outside Birmingham, Ala.

And, as he told me during a telephone interview recently, he’s got a whole new attitude going into 2021. “I feel like an IndyCar driver now,” Kellett said. “I’m in a position now to know what I want out of the car. I needed the experience I gained last year to get to that point. I’m excited.”

Last year, he knew he was the new kid on the block at A.J. Foyt Racing team and didn’t make waves. He kept his mouth shut and listened and — except for the Indianapolis 500 — didn’t crash the car, which is what’s expected of rookies.

And the fact he survived and made a good enough impression on the Foyt team for them to offer him a full-time ride for 2021 (he shared the car with veteran Tony Kanaan last year) has given him the confidence to start making his presence felt.

Having a new teammate isn’t hurting either, particularly since said teammate happens to be one of the best racing drivers in the world, Sebastien Bourdais. More about all that in a moment.

First, for those of you not familiar with Kellett, he’s 27, came up through karting and the Road to Indy minor-league series, and has done some sports car racing in addition to the single seaters he’s concentrating on now. And while he was climbing the racing ladder, he graduated from Queen’s University in Kingston with a degree in engineering physics.

The highlight of his apprenticeship years came in 2018 when he won the pole for the Indy Lights Freedom 100 race at the Indianapolis Motor Speedway. This was no small task, as the driver he edged out for the coveted starting position was none other than fellow IndyCar racer Pato O’Ward.

Last year — his first with the Foyt team — he only raced on the road and street courses, the one exception being the Indianapolis 500. Which was a shame because his strength to date has been on oval tracks. He qualified 24th (out of 33) for last year’s “Greatest Spectacle in Racing,” outqualifying veteran drivers like three-time winner Helio Castroneves, Simon Pagenaud and F1 star Fernando Alonso. He was heading for a potential Top Ten finish when unknown racer Ben Hanley forced him to back out of a pass attempt and that put him up the track and into the wall. His best finishes the rest of the season came at a Detroit double-header where he was 20th both times.

Kellett is determined to do better this year and is expecting that Bourdais will be a big help.

“He joined our team at the end of last season,” Kellett said, “and he made his presence felt immediately. He was very exacting from a setup standpoint and it was interesting to watch how he pushed the team to give him what he wanted. He’s got 15 years of experience (in Indy cars, sports cars, F1) to draw on.

“As a result, I’ve found myself more assertive. While giving feedback to engineers (during tests), I find that I’m definitely more confident and able to say, ‘This is what I want.’”

Kellett not being a rookie anymore is probably a good thing, because two of the most famous racing drivers in the word are first-timers and will likely hog most of the IndyCar publicity this year. Seven-time NASCAR Cup champion Jimmie Johnston, who’s padding his CV by driving a part-time schedule in IndyCar for Chip Ganassi, and Romain Grosjean, who moved to IndyCar from Formula One after his employer, Haas F1, didn’t renew his contract.

Has Kellett bumped into them yet?

“I haven’t met Grosjean,” he said, “but I’ve been around Jimmy and I know him enough to say, ‘Hi.’ I think both of them have the will and the experience to drive the car to the point of being competitive. I think Grosjean will have a bit of an easier time because of his open-wheel experience in Europe; the F1-to-IndyCar jump is probably easier than NASCAR-to-IndyCar.

“I hope Jimmie does well, though. He’s certainly putting in the effort. All-power to him,” Kellett said. “They’re both world-class drivers and I think it’s great for the series and it will be great racing against them, that’s for sure. I’m looking forward to that and I hope I beat them.”

And how does Kellett expect to do this season, overall. Can he win a race?

“I’ll be trying but you have to be realistic. I think in terms of milestones and benchmarks. The first milestone would be to start off in at least the Top 20 in the series and stay there. As I climb higher, I want to stay there rather than falling back. I want to be consistent,” he said. “As a race driver, though, your first benchmark is your teammate, particularly on the road courses. If I can be on pace, within a couple of tenths of Sebastien’s times, with his experience, I’ll be pretty happy.”

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And what about the Indianapolis 500?

“Indy is the one race that everybody wants to win. But it’s still important to focus on the process (where you work up to speed gradually) and not get caught up in all that. I’d like to qualify a little better – we probably should have trimmed a little more than we did last year but when you’re a rookie, you don’t want to take too many big swings.

“But to qualify in the Top 10 or Top 15 would be an improvement from last year and I’d like to put myself in a position to be fighting for a good finish at the end. I’d be happy with that.”

Norris McDonald is a retired Star editor who continues to write for Wheels under contract. He reviews the weekend’s auto racing every Monday at wheels.ca.




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City regulation: robocops can create post-Brexit advantage

City regulation: robocops can create post-Brexit advantage


The City of London needs to up its game to compensate for Brexit losses. That is one reason to welcome Friday’s push for more “RegTech” — regulatory technology — by the Square Mile’s governing body. Technological advances involving data science, machine learning and cloud computing have opened up new approaches to dealing with regulatory risk. 

The predicted Brexodus of financial assets and jobs is under way. Banks and insurers have transferred £900bn of assets, just under 10 per cent of the UK’s total. Staff moves have so far reached 7,400, according to consultancy New Financial. It is not all one way. Up to 500 EU-based firms are expected to open a UK office. But the toll on the City is likely to increase in coming years.

Lingering hopes that the UK would be granted more market access in return for an agreement on supervisory “equivalence” have largely faded. That creates an opportunity, as well as a cost. There is some room for manoeuvre. 

The UK wants to make its approach to regulation a competitive advantage. It aims to strike a balance between the EU’s detailed, prescriptive approach and the patchy US one, shown up by the Archegos Capital blow-up. Advocates of RegTech claim that it can play a part by enabling real-time market surveillance and helping to predict where risks will emerge. That could make supervision more preventive and less reactive. 

Such claims should be treated with caution. The UK’s “light touch” financial regulation in the noughties did not end well. But RegTech can reduce risks and improve efficiency. It could also result in a modest reduction in compliance costs — about £500m, or 0.05 per cent of the annual total, for Britain’s top five banks, according to RT Associates.

There is no silver bullet to deal with Brexit woes. RegTech will not transform demand by itself. But the City needs to consider all possible ways that it might boost its appeal.

The Lex team is interested in hearing more from readers. Please tell us what you think of “RegTech” and the post-Brexit City in the comments section below.



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