A revolution is looming in the world of sugar – and it is potentially good news for thousands of British farmers.
At the end of the month, the EU’s quotas on sugar are to be abolished, meaning that for the first time in decades Britain can produce and sell as much sugar around the world as it would like.
For Britain’s estimated 3,500 sugar beet farmers, this is an opportunity to ramp up production from the current 8 million tonnes they produce annually, perhaps by as much as an extra 500,000 tonnes a year.
The UK has only been growing sugar beet for 105 years and yet its farmers are arguably the most efficient in Europe.
The French are capable of producing more, because France is such a large country, but only the Dutch are capable of achieving the crop yields that the British do.
It’s an industry that supports getting on for 10,000 UK jobs each year, particularly in Nottinghamshire and East Anglia, where the four beet processing sites – owned by British Sugar, part of Associated British Foods – are based.
Video: Brexit bittersweet for sugar producers
The big opportunity for beet growers and processors is the export market.
While British Sugar – whose brand is Silver Spoon – supplies around 60% of the UK’s sugar consumption, the company hopes the abolition of quotas will open up export markets around the world, which longer term could result in sugar beet production being ramped up in Britain’s fields by as much as 50%.
Michael Sly, a Cambridgeshire-based farmer whose family has been farming in the Fens for more than 300 years, told me: “In terms of calorific value, the amount of calories of food that can be produced from a hectare of land, there is probably no other crop that is as efficient as sugar beet.”
Britain is not alone in hoping to exploit this opportunity. French and German farmers have also ramped up beet production ahead of quotas being abolished, as have producers further afield in the EU, including countries such as Croatia.
Added to this, the beet crop is expected to be particularly good in northern Europe this year, due to good weather conditions.
For Paul Kenward, the managing director of British Sugar, the abolition of quotas will be an opportunity to expand production of his four UK factories. He told me: “This is a really exciting opportunity for us to sell our high-quality British sugar around the world.”
Image: Tate & Lyle Sugars say the abolition of EU quotas is
But not everyone welcomes the abolition of EU quotas. The other big UK sugar producer, Tate & Lyle Sugars, is unhappy about the situation.
This is because it produces sugar refined from cane imported from around the world. It is unhappy about the abolition of quotas because it benefits only beet processors.
Sugar cane imports, by contrast, are subject to EU import tariffs. It’s one reason why Tate & Lyle, which is no longer part of the listed Tate & Lyle plc but owned by American Sugar Refining, was one of the few British companies to actively campaign for the UK to leave the EU.
It hopes that, outside the EU, it will be free to import as much sugar cane and export as much refined sugar as it can.
In the meantime, ahead of Brexit, it is worried about the competitive advantage its main domestic rival will enjoy.
Gerald Mason, senior vice president of Tate & Lyle Sugars, told Sky News the new arrangement could allow British Sugar to enjoy “supra-normal” profits.
He added: “Europe’s liberalisation of beet sugar production – with no relief from the tariffs and restrictions levelled against raw cane sugar – is a terrible scenario for us.”
It is perhaps no coincidence that Britain’s Brexit Secretary David Davis, one of the few top-rank politicians in any party to have worked in business, cut his teeth as a junior executive at Tate & Lyle Sugars.
Colleagues at the time to whom Sky News has spoken believe the experience of dealing with the EU’s sugar regime informed Mr Davis’s wider Euroscepticism.
The big unknown for all sides is what happens after Brexit. If tariffs are imposed by the EU on UK exports after Brexit, that would hamper British Sugar’s ability to sell into the EU, although it would be a beneficiary if Britain succeeds in reaching free trade deals with other countries around the world.
For Tate & Lyle Sugars, the end of the EU’s tariffs on imported cane sugar would benefit it, although British Sugar’s Mr Kenward notes that – because of the way countries like Thailand and Brazil subsidise sugar cane production – there would be a danger of cheap cane sugar flooding into the country and dampening prices.
All of which would stamp out the revolution in Britain’s sugar beet industry before it has even got started.
Source: Sky