Throughout the lead-up to the Brexit referendum little attention was given to the sugar industry, despite its long and embattled relationship with the EU and the common market.
However, now that the vote has passed and plans are being officially laid, both sugar beet and sugar cane industries say that their future in an independent Britain is bright.
Since the 1970s, Tate & Lyle – England’s chief importer of cane sugar – has been protesting what it sees as biased regulations dictated by Brussels.
Control of the sugar market within the EU, which is set to change dramatically later this year with the EU sugar reform, has favoured growers of beet sugar, a native European crop.
Gerald Mason, head of Tate & Lyle sugars, wrote a letter to his employees shortly before the referendum, voicing his opinion on the company’s place in the EU:
“My aim was to secure reform of the EU’s unfair system of cane sugar restrictions and import tariffs, designed to protect our beet sugar competitors in the rest of Europe. I have pushed for that reform right up to the last few hours.
“Sadly, I am writing to let you know that I haven’t been able to secure that reform from the EU. I know it has been uncomfortable for you to hear in the media about the threat from the EU to our jobs, but I am proud of the arguments we put forward and the fact that everybody – leave or remain – agreed that the EU policies we face are wrong and need to change. Without these EU policies our business would be thriving but instead it is losing money.”
Mason said that in 2015 EU restrictions on cane imports caused raw materials prices to go up by €40 million, causing the company to take a €25 million loss.
He added that when protesting his company’s subjection to a €3.5 million annual import tariff, an EU minister explained this was because they are outnumbered by beet producers.
“That is not the sort of democracy I want to be part of,” he concluded.
Speaking to FoodNavigator, Mason reiterated his position, saying: “The challenge we have had is that the tread regulations are turning in Europe, there are 19 countries that have beet and only a few that do cane, and the regulations were becoming more and more unfair.
“In 10 of the 19 countries 117 million is paid in subsidies – cane is limited to 5% of global sugar and we pay tariffs, instead of receiving subsidies. When these decisions are made in Westminster it can only be better than when they’re made in Brussels.”
Those who fought for a remain vote however, maintain that not only was Britain’s economy stronger within the EU but that aspects of the membership such as the tariffs on cane imports could have changed.
Whatever the situation for the British economy overall, Rabobank economist Ruud Schers said in order to understand the new situation the UK sugar market faces, production and consumption figures must be taken into account.
“Britain produces one million tonnes of beet sugar per year but consumes two million, so there is a deficit. Whether this comes from raw (cane) or whites (beet) will depend. Something like an agreement with former commonwealth countries is definitely possible, but Britain will have to compete for these deals with the EU,” said Schers.
Robin Shaw, an analyst at commodity broker Marex Spectron, agreed a return to a former commonwealth agreement is possible. “If the UK reversed to [...] the situation prior to joining the EU – which was a duty-free quota for commonwealth countries, refined by Tate and Lyle, and heavy import quotas on continental sugar – both British Sugar (head of Britain’s beet growing industry) and Tate & Lyle would profit,” he said.
However, Shaw added that there is little incentive for Britain to levy heavy tariffs on imports of beet sugar from the EU. “A Brexit which takes away the UK as a market for continental sugar will be very bad news. What will actually happen of course, no one knows. The fact is Britain has enjoyed low sugar prices in the last regime – purely from a sugar point of view; Britain doesn’t have much incentive to put up trade barriers against receding continental sugar.”
Putting tariffs up against European sugar would mean raising prices for consumers considerably, although Britain’s sugar industry itself would profit considerably.
The beet sugar industry did not speak out against the EU before the referendum, but Paul Kenward, head of British Sugar, told FoodNavigator his company was prepared for any outcome.
“If the EU puts up a new tariff against British sugar coming into Europe, we would just ask for equal measures against the EU. As long as there is a level playing field, we can continue to grow.
“Since 2006 we have been preparing for the removal of EU quotas, we have significantly invested in our people, our research, our growers, our efficiency and so on. This has put us in a very strong position. What does Brexit actually mean? The major change will be immigration and access to other markets, but we are confident we can work with this so long as the government provides a level playing field for sugar.”
Robin Shaw agreed with this, but said that Brexit is still preferable: “I’m sure it’s true that British Sugar are protected against the effects of Brexit. The worst case scenario for British Sugar was already to be part of the common market and the EU with no more quotas and open to the harsh winds of the world market.”
The details of whatever new trade regulations the British government decides to implement remain to be seen, but for the sugar industry the slogan ‘Out, and into the world’ may be a positive reality.