Tariff Free Sugar Cane Imports v UK Sugar Production
On 19th May 2020 the UK announced that for 12 months from 1st January 2021, 260,000 tonnes of raw cane sugar could be imported into the UK tariff free. https://www.gov.uk/government/consultations/autonomous-tariff-rate-quota-atq-raw-cane-sugar-consultation-2020/information-pack
Many people, including the British sugar beet farmers and processors of East Anglia, would have looked at this announcement and asked, why?
British Sugar
There are approx. 3,000 sugar beet farmers and around 9,500 people employed directly or indirectly in the production process. British Sugar, part of the Associated British Foods Group operates manufacturing plants in the East of England, producing up to 1.5 million tonnes (1.18 million tonnes in 2019/20) of home grown sugar, almost all of which is consumed in the UK. British Sugar produces approx.50% of UK sugar consumption, with approx. 25% of our demand fulfilled by EU sugar beet processors.
British Sugar has one of the lowest costs of production within Europe. The yields per acre of sugar beet are higher than that of cane sugar growers and the majority of the beets are grown within 60 miles of a refinery.
EU sugar production quotas were abolished in 2017, https://www.agriculture-strategies.eu/en/2019/07/the-european-sugar-policy-a-policy-to-rebuild/ reducing the income for beet farmers to £19-21 per tonne, compared with the £30 per tonne they previously enjoyed. Neonicotinoid containing insecticides were also banned in 2018, https://www.nature.com/articles/d41586-018-04987-4 increasing the cost of production and reducing beet yields. As a result, East Anglian beet farmers started cutting back on beet in favour of other cash crops.
Tate & Lyle
Tate & Lyle, owned by American Sugar Refining, are donors to the Tory party and were prominent supporters of Brexit. They operate, at 1.2 million tonnes per annum, Europe’s largest sugar refinery at Silvertown, London. However, it has only been operating at around half a million tonnes per year, because the imported raw cane sugar it processes has been subject to a 15% premium on the world market price, accounting for 60 to 80% of production costs.
Sugar cane is grown in tropical and sub tropical climates. A report from 2009 https://www.researchgate.net/publication/272895539_Status_report_on_sugar_cane_agrochemicals_management_Agrochemicals_in_the_sugarcane_industries_health_and_environmental_challenges_and_solutions states that, ‘While the pesticide requirements of sugarcane crop are relatively modest compared to other similar cash crops, agrochemicals continue to generate harmful impacts, especially in the major sugarcane producing developing countries.’ The report goes on to state that institutional weaknesses and the lack of financial and human resources, prevent the implementation of good pesticide application practices.
Australian Imports
The UK trade agreement with Australia presents another challenge for UK sugar producers. Tariffs on imported sugar are to be eliminated after an 8 year transition period, giving Australia duty-free access to the UK market.. https://www.hfw.com/UK-Australia-Free-Trade-Agreement-0821
NFU Sugar board chair Michael Sly, stated in July this year, https://www.nfuonline.com/sectors/nfu-sugar/nfu-sugar-news/uk-australia-trade-deal-the-view-from-nfu-sugar-board-chair-michael-sly/ that ‘the UK government is failing to recognise the significant impacts there will be on sugar beet growers in Eastern England. The typical justification for the benefits of free trade does not stand up in this case, since UK growers are subject to different regulatory standards compared to our Australian cane growing friends.’
The UK is one of the most efficient sugar producers in the world, but British growers cannot compete against those following a different set of standards. Australian sugar cane growers have access to plant protection products containing over 30 active ingredients that are illegal for use in the UK.
The UK still has a sweet tooth
There is still a strong demand for sugar in the UK. A Public Health England report from 2019 https://www.gov.uk/government/publications/sugar-reduction-report-on-progress-between-2015-and-2019 states that despite the introduction of the sugar tax,
‘Overall, the total amount of sugar sold in foods included in the reformulation programme, has increased by 2.6% between 2015 and 2019’
This jump – from 722,976 to 741,700 tonnes of sugar – represents a 0.5% increase in sugar purchased per person.’
Brexit allowed the UK government to change the UK sugar policy in favour of a 50:50 supply of both beet and cane sugar. In seeking to agree new trade deals, in 2019 it stated that on leaving the EU single market and customs union, 87% of UK imports would no longer attract tariffs.
Without a Government commitment to protect British farmers, many of the UK’s agricultural sectors, including the sugar beet growers and processors of East Anglia, will be forced to compete with cheaper, global imports of products produced to lower standards than those in the UK.
RHG/1.11.21
Many people, including the British sugar beet farmers and processors of East Anglia, would have looked at this announcement and asked, why?
British Sugar
There are approx. 3,000 sugar beet farmers and around 9,500 people employed directly or indirectly in the production process. British Sugar, part of the Associated British Foods Group operates manufacturing plants in the East of England, producing up to 1.5 million tonnes (1.18 million tonnes in 2019/20) of home grown sugar, almost all of which is consumed in the UK. British Sugar produces approx.50% of UK sugar consumption, with approx. 25% of our demand fulfilled by EU sugar beet processors.
British Sugar has one of the lowest costs of production within Europe. The yields per acre of sugar beet are higher than that of cane sugar growers and the majority of the beets are grown within 60 miles of a refinery.
EU sugar production quotas were abolished in 2017, https://www.agriculture-strategies.eu/en/2019/07/the-european-sugar-policy-a-policy-to-rebuild/ reducing the income for beet farmers to £19-21 per tonne, compared with the £30 per tonne they previously enjoyed. Neonicotinoid containing insecticides were also banned in 2018, https://www.nature.com/articles/d41586-018-04987-4 increasing the cost of production and reducing beet yields. As a result, East Anglian beet farmers started cutting back on beet in favour of other cash crops.
Tate & Lyle
Tate & Lyle, owned by American Sugar Refining, are donors to the Tory party and were prominent supporters of Brexit. They operate, at 1.2 million tonnes per annum, Europe’s largest sugar refinery at Silvertown, London. However, it has only been operating at around half a million tonnes per year, because the imported raw cane sugar it processes has been subject to a 15% premium on the world market price, accounting for 60 to 80% of production costs.
Sugar cane is grown in tropical and sub tropical climates. A report from 2009 https://www.researchgate.net/publication/272895539_Status_report_on_sugar_cane_agrochemicals_management_Agrochemicals_in_the_sugarcane_industries_health_and_environmental_challenges_and_solutions states that, ‘While the pesticide requirements of sugarcane crop are relatively modest compared to other similar cash crops, agrochemicals continue to generate harmful impacts, especially in the major sugarcane producing developing countries.’ The report goes on to state that institutional weaknesses and the lack of financial and human resources, prevent the implementation of good pesticide application practices.
Australian Imports
The UK trade agreement with Australia presents another challenge for UK sugar producers. Tariffs on imported sugar are to be eliminated after an 8 year transition period, giving Australia duty-free access to the UK market.. https://www.hfw.com/UK-Australia-Free-Trade-Agreement-0821
NFU Sugar board chair Michael Sly, stated in July this year, https://www.nfuonline.com/sectors/nfu-sugar/nfu-sugar-news/uk-australia-trade-deal-the-view-from-nfu-sugar-board-chair-michael-sly/ that ‘the UK government is failing to recognise the significant impacts there will be on sugar beet growers in Eastern England. The typical justification for the benefits of free trade does not stand up in this case, since UK growers are subject to different regulatory standards compared to our Australian cane growing friends.’
The UK is one of the most efficient sugar producers in the world, but British growers cannot compete against those following a different set of standards. Australian sugar cane growers have access to plant protection products containing over 30 active ingredients that are illegal for use in the UK.
The UK still has a sweet tooth
There is still a strong demand for sugar in the UK. A Public Health England report from 2019 https://www.gov.uk/government/publications/sugar-reduction-report-on-progress-between-2015-and-2019 states that despite the introduction of the sugar tax,
‘Overall, the total amount of sugar sold in foods included in the reformulation programme, has increased by 2.6% between 2015 and 2019’
This jump – from 722,976 to 741,700 tonnes of sugar – represents a 0.5% increase in sugar purchased per person.’
Brexit allowed the UK government to change the UK sugar policy in favour of a 50:50 supply of both beet and cane sugar. In seeking to agree new trade deals, in 2019 it stated that on leaving the EU single market and customs union, 87% of UK imports would no longer attract tariffs.
Without a Government commitment to protect British farmers, many of the UK’s agricultural sectors, including the sugar beet growers and processors of East Anglia, will be forced to compete with cheaper, global imports of products produced to lower standards than those in the UK.
RHG/1.11.21
As published by East Anglia Bylines: https://eastangliabylines.co.uk/government-threats-to-sugar-industry/