Britain’s homegrown sugar industry needs a fair deal post-Brexit

Britain’s homegrown sugar industry needs a fair deal post-Brexit

It’s been a little over year since the British public voted to leave the European Union. And with David Davis having begun Brexit negotiations in Brussels, the finer details of our departure settlement are soon to be thrashed out.

Among those watching the talks eagerly will be the food and farming sector. Brexit offers a number of opportunities for the UK’s agriculture industry – it should mean in the long term that our food producers will be able to go out and sell their goods on a global stage competitively.

If we get the terms right, one particular beneficiary of Brexit will be the beet sugar industry – a curiously little known British success story which supports more than 9,500 jobs.

Sugar beet cultivation in Britain is something of an enigma. We are a world class producer of sugar: only this year, a detailed analysis of the industry ranked British Sugar as the lowest cost beet sugar producer in the world.

Yet this is an unheralded success story of which few people are aware; a ComRes poll published last month found that six out of ten Brits aren’t even aware that we grow sugar in this country, believing that all their sugar is imported from overseas.

British Sugar partners with over 3,500 sugar beet growers in the UK, largely in East Anglia and the East Midlands, producing around eight million tonnes of sugar annually and which earned growers more than £317 million in 2014/15. Currently, about 60% of the country’s demand for sugar is satisfied from homegrown sugar beet, with the rest satisfied by imported sugar cane.

As of this October – prior to Brexit taking effect – British Sugar will be free from a Brussels-imposed quota system which has restricted the amount of sugar we can produce and sell. For example, in 2014 we had a record crop, leading to an over-supply of sugar – but current EU rules meant that we weren’t allowed to sell our surplus sugar in the UK, EU or world markets. That restriction will soon be no more.

Beyond that, British Sugar stands ready to work with growers, importers and the government to design a UK sugar policy that allows our domestic industry to continue to thrive, while also driving positive outcomes in terms of international development for exporters from some of the poorest countries in the world.

Let’s not pretend that this is going to be simple. Tate & Lyle Sugars, the US-owned cane sugar importer which operates a refinery in East London, senses an opportunity in unfettered free trade, allowing cane to be imported to the UK at zero tariffs. Indeed, they argued the case for such a scenario on this very website in February.

In thinking about free trade, however, we need to be wary that the sugar business, like all global agricultural markets, is complex and is prone to distortions. Around the world, over 100 countries produce sugar – yet three quarters of volumes come from just three countries. Two of these – Brazil and Thailand – heavily subsidise their sugar production. When their surpluses enter the global market, it can lower the price below production cost and unfairly undermine the significant investment in productivity and efficiencies over the last decade by other sugar producers, such as British Sugar.

Britain needs to put trade agreements in place which counter distortions.

As far as trading with the rest of the world is concerned, we would only favour tariffs sufficiently to counterbalance foreign subsidies. Unilateral removal of all trade instruments would leave the UK market exposed to sugar dumping and failure to capitalise on our competitiveness. In terms of Europe, all we ask of our government is that outside the single market any tariffs from the EU that frustrate our exports are matched by reciprocal tariffs in the other direction

Britain has grown sugar beet for more than a century. By-products from our advanced manufacturing plants include generation of enough electricity to power a city the size of Peterborough, topsoil for the Chelsea Flower Show and the Olympic Park, plus 500,000 tonnes of animal feed which would otherwise have to be imported – all derived from sugar beet.

We must seize the opportunity to design a policy which allows Britain’s beet sugar industry to prosper outside the EU. Let’s make sure we make the right decision for growers, jobs and communities, whilst continuing to provide choice for consumers.