Why the UK, exporters are set for a sugar rush

The UK beet sugar industry is looking to increase production, such as the European Union, of quotas of to come to the end of this week, after nearly 50 years.

For the first time since 1968, the united KINGDOM can produce and sell as much of sugar in the world as he would like.

The end of quotas also means that the French, German and other EU producers can sell more of sugar in the united KINGDOM.

Experts predict that could lead to lower prices, but the Uk industry is confident it can compete.What will be the sugar changes mean?

Two years ago, Paul Kenward, the owner of British Sugar, had a problem.

In the framework of the quota, it has been authorized to sell 1.056 million tonnes of sugar beet, but it had been a particularly abundant harvest, and that he had produced more than 1.4 million tonnes.

British Sugar

“The customers wanted to buy from me, but I was not allowed by the European Union relating to sell,” Mr. Kenward said to the BBC. “We had to store it for two years – which is very expensive.”

From this weekend, these limits will come to an end, after years of lobbying by the government of the united KINGDOM.

The 3 500 British farmers who grow the sugar beet looks like a large turnip and British Sugar, which is the main processor of the British-grown beet, see the change as a huge opportunity.

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British Sugar, which also makes Silver Spoon sugar – plans to stage the production immediately and is looking to sell 1.4 million tonnes next year, from 900,000 this year.

It is also planning to export sugar on the global market for the first time since at least a decade.

“The UK is one of the most efficient producers in the world,” says Jane Clark, who grow the sugar beet in Lincolnshire. “It is necessary to put us in a good spot to be competitive.”

The changes are not related to “brexit” and the industry is the hope that he will still be able to compete after the UK leaves the EU.

Britain’s other large sugar producer, Tate & Lyle Sugars, a process of sugar cane, and therefore is not directly affected by the changes.

What is the size of the united KINGDOM sugar beet industry?
There are approximately 10 000 workers in the UK industry supply chain
The UK consumes 2 million tonnes of sugar per year
60% of which comes from beets united KINGDOM
Another 15% comes from sugar beet, the EU, and 25% of the imports of cane sugar

Source: British Sugar

What will be the impact on the price of sugar?

The analysts say that the increase in the supply of sugar – and not just in the UK, but other major producers of the EU – should, in the long term, lead to lower prices.

For the moment, white sugar sells for about 500 euros (£440) per tonne in the EU, compared to just over 300 euros per ton on the international market, according to figures from the EU.

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The prices will become more volatile after the end of quotas, ” said Carlos Mera, a sugar analyst at Rabobank. “If consumers benefit or not, I think they probably will.”

However, the effect on sweet products, such as cola and a sponge cake, will be more modest, because the cost of sugar accounts for only a small part of the overall price of these goods.

For example, if the price of sugar has fallen by 40%, which could lead to a saving of less than 1% on the price of a Victoria sponge cake.

However, until now, the sugar supply contracts in the EU are still much higher than international prices, said Julien Macpherson, head of commodities, financial services firm Investec. There is also the effect of the sugar tax on soft drinks to be taken into account.
The taxation of sugar and sweet & sour
Sugar flavor of change “gradually”
Tate & Lyle Sugars has joined the campaign to leave the EU

The Food and Drink Federation said that it is difficult to predict how prices will be affected.

A wide range of factors, including world market prices, sugar beet, exports, imports of cane sugar, the price of the other ingredients and raw materials, the influence of the prices of sweet products, ” he said.Will the industry be able to cope?

Although the end of quotas allows UK companies to sell more sugar abroad, it will also allow the EU producers to sell more in the united KINGDOM.

When milk quotas were removed in 2015, it has flooded the market with excess supply and put some dairy farmers out of business.

It will be beet producers suffer the same fate?

“I don’t think that the producers of beet sugar in the country comes from sugar beet crops,” said Jane Clark. “We all grow a variety of crops, whether wheat, barley or oats.”

Mr. Kenward said that the industry has learned a lot of what happened with the milk. “We prepared for this for the last few decades, and can change the production more easily than dairy farmers,” he said.

There is also uncertainty around what the trading conditions will be in place after “brexit”.

British Sugar said that if the EU starts to charge customs duties on beet sugar after brexit, the company should ask the BRITISH government to pay the same rate of beet in the EU.

As for the trade with the rest of the world, British Sugar agrees that the removal of sugar tariffs may be part of the contracts concluded with other countries.

But he is convinced that it can compete, such as the united KINGDOM is “the most cost-effective for the producer in the world,” Mr. Kenward said.

Is there a difference between beet sugar and cane sugar?

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When it comes to taste, the sugar-beet producers to Jane Clark asserts that there was no difference between sugar from beets or cane.

The climate and soil conditions in the united KINGDOM, France, Germany and the netherlands costume of the sugar beet. His production took off after a blockade of the English during the Napoleonic wars, hit French cane-sugar imports.

In comparison, the sugar cane tends to grow in the tropics, with Brazil, Thailand and India, the main producers.

“You can further refine the sugar to the bottom at different levels,” Jane said. “White sugar is more refined, your brown sugar is less refined.”

In the end, it’s all the same chemical formula: “Sugar is sugar”