British sugar set to sweeten

October 30, 2017

The European Union has announced the end of its limitations on production and minimum pricing for sugar, taking effect from Sunday 1st October, a restriction which was first established in 1968. The move has been described as one the biggest changes for British agriculture in recent years, and set to enliven the sugar industry, allowing farmers to produce as much sugar beet as they want.

The UK have been growing sugar beet, which is said to be no different to sugar cane, for 105 years and are arguably the most efficient producers in Europe. Prior to this change, Britain had been faced with limiting their production, resulting in stockpiling following bumper harvest.

This development brings good news to the 3,500 British sugar beet farmers who will now be able to increase production by 50% annually, and are planning to export sugar to the world-wide market, for the first time in at least a decade as a result, enabling British growers to complete globally, against the biggest sugar producers around the world. The sugar beet crop is also expected to be particularly good this year due to favourable weather conditions within northern Europe.

The British sugar beet industry supports nearly 10,000 jobs across the UK, and supplies around 2m tonnes of sugar a year; 60% of the UKs sugar need, while an additional 15% comes from the EU, and the 35% from imported sugar cane.

The abolishment of production limitations is not only enticing some farmers to plant more, it is also encouraging companies to invest, such as Dubai-based Al Khaleej International who are looking at opening a large factory within the UK, which would be the first new site to open in the UK for 90 years.

Good news for the farmers ultimately means good news for the consumer, as an increase in production will result in more produce within the market, and the start of lowering prices, with UK sugar becoming even more competitively attractive on supermarket shelves.

Whilst UK farmers will enjoy the freedom from production and price restrictions, they will have to face fierce competition from other EU producers who will also benefit from this freedom. This competition will further help to drive down consumer prices.

However, there is uncertainty as to what will happen after Brexit, and whether tariffs will be imposed by the EU on UK exports. On the other hand, Brexit may benefit Britain if there is success in reaching free trade deals with countries around the world.

There is further concern that these lifted restrictions on sugar will result in a similar crash in which the milk industry has seen, where the market was flooded with oversupply and put farmers out of business. This concern has little conviction as British sugar beet famers have the security that they often grow many additional crops, such as wheat, barley or oats that they can also rely on.

Expectation is for the British sugar market to boom, for the foreseeable future.