UK: Sugar to get tricky with Brexit
Published: 07/31/2017, 10:44:10 AM
Sugar has been at the centre of international tussles before. It was Napoleon who introduced sugar beet to Europe after his access to cane was threatened. In 2017, new battle lines are being drawn over the British sugar industry, with Brexit as the potential flashpoint, according to the UK's CityAM.
British Sugar, part of Associated British Foods, supports 9,500 jobs in the UK economy and supplies 60 per cent of the domestic market from sugar beet. It says it will be at the mercy of cheap imports made from sugar cane unless an existing EU tariff is replaced with a new one in the post-Brexit world.
Removal of all tariffs when the UK exits the single market and customs union would open doors to a flood of sugar cane imports from countries such as Thailand and Brazil where governments actively protect and support cane growers.
To prevent this dumping and create a level playing field, British Sugar wants the government to erect a new tariff governing trade with non-EU countries that actively support their sugar industries. This would allow it to continue to invest and thrive, it says.
Meanwhile, industry insiders say the case of British Sugar underscores the need for bespoke Brexit deals that take into account the needs of specific industries, particularly in agriculture.
"It is a very political crop. Every country trade protection regime and tariffs that recognise the distorted nature of the market," says British Sugar managing director Paul Kenward.
"We believe in free trade; the current tariff protection is too high. However, tariffs should be reduced over time, not on day one [after Brexit]. While there are distortions in the wider market, we need protection."
In his view, Brexit presents an opportunity to create cost-effective, high-quality sugar products because British Sugar is in good shape. For years, the company has been getting ready for the end of EU quotas in October.
These are long-awaited reforms, separate to Brexit, that will finally allow it to export more, especially in the event of bumper beet crops. Preparations have included the investment of £250m in four advanced manufacturing plants. With the help of new technology and research, UK sugar beet yields have risen by a quarter in the last decade.
British Sugar also wants a level playing field in terms of tariffs with the EU post Brexit. If the EU has a tariff in place and the UK does not, that creates an unfair advantage, Kenward says.