Industry and consumers unlikely to meet government target for peat extraction

Defra admitted it was reassessing the amateur and yet-to-be-set professional use targets with a new consultation to be launched this month, with policy outcomes included in a 2011 white paper.

Sinclair issued an "upbeat" research note: "While the Government has a policy of ending all peat extraction in Britain by 2020, there is a strong probability that this will not take place. The target of reducing extraction by 50 per cent by 2010 has already been missed by a large margin. The compensation payments necessary to the industry hardly rank as a top priority for Government spending currently."

The company estimated £72m in Government compensation would be due for its two-million cubic metre peat stocks, based on the £9m received for Bolton Fell, if it sticks to the previous Government's aim to eliminate peat harvesting by 2020.

The note warns that compensation "won't happen, first because the Government won't want to spend the money and second because the majority of Sinclair's peat is in Scotland, where the promise to cease harvesting for retail has not been given." It adds: "Sinclair is a clear value proposition for the investment community, with very significant upside."

Sinclair said it expected profits to rise from £3.11m in 2010 to £4.77m in 2012 and margins could rise from four per cent to 10 per cent because of increased use of SincroBoost.

A Defra representative said: "We recognise the importance of encouraging further reductions in the horticultural use of peat. We will launch a consultation before the end of the year to look at the impacts, costs and benefits of achieving this."

NFU horticulture adviser Dr Chris Hartfield added: "The Government is still looking to eliminate (amateur) peat use in that time frame."