Sugar beet
• Production quotas abolished across Europe
• End of minimum sugar beet purchase price
• Removal of limit on isoglucose production
A
bolition of the quota sys- tem means there will be no limits on how much
sugar beet processors and grow- ers can supply to internal markets from this autumn onwards, write Robin Limb and Simon Allen*. The EU sugar quota regime –
which has controlled sugar beet growing in Europe since 1968 – comes to an end on 30 September. It means that the EU can produce as much sugar as it wants, export restrictions will be lifted and there will be no World Trade Organisa- tion (WTO) limit.
But growers and the wider pro- cessing sector will also be more exposed to competition from beet imports and from isoglucose, a corn-based sugar alternative, which currently has strict limits imposed on its production. The only market protection measure that the EU industry will retain is a formidable import tariff, set at €350/tonne, to deter foreign sugar exporters such as Brazil, from access to EU markets. And Brexit complicates forecasts predicting how the industry will evolve in the long term. Up until 2020, the UK govern-
ment has pledged to continue to uphold the tariff barrier. But be- yond that date, industry commen- tators are sceptical that it will be continued because of the UK gov- ernment’s stated commitment to freer trade.
Big exporters Even if it were to adopt a suggest- ed 10% tariff, this would not deter the big exporters from Brazil from targeting the sector. And this could put UK growers and the industry on the back foot when compared with its EU neighbours. Europe’s beet sugar output, af- ter September 2017, will depend on the number of countries that continue in production and which
The winds of change are blowing for the UK sugar beet sector
Growers face competition after end of quotas
ones decide to contract or expand. With no ceiling on production and beet yields steadily increas- ing, output is expected to rise. According to European Commis- sion forecasts, sugar production between 2017 and 2025 could in- crease by 5% to 17.7mt a year. Brussels suggests isoglucose production will see a three-fold increase, rising from the current capped 700,000t annual yield, to 2.3mt. And it is predicted that EU sugar prices will be more closely aligned to world market prices.
Protection
As production grows inside the EU, under the protection of the €350/t trade tariff, imports are ex- pected to halve from about 3.5mt to 1.8mt/year. At the same time the
EU has suggested annual exports will go up from 1.3mt to 2.5mt. One fear for the future is that competition for market share is likely to become intensive between countries both inside and outside Europe. Countries could even un- dermine each other’s market po- sitions by increasing production and offloading surpluses cheap- ly to undercut prices.
Ultimately the supplier that wins will be the one that can sell for the lowest price. Currently, there is still prefer-
ential access from former Com- monwealth countries like Fiji and Mauritius. But as relatively inef- ficient producers, these nations will find it increasingly difficult to compete.
Conversely the French sector is in a relatively strong position
because quotas in France were set well above production capa- bilities. This sustained a higher number of growers which means it can now scale-up production rap- idly. French processing capacity is also high.
Depressed
When beet markets were de- pressed – unlike the UK which sold off factories – French proces- sors mothballed facilities in case the market once again changed. That foresight may pay off as France can boast 20 factories com- pared to the UK’s four. With this production scenar- io the producer-owned co-ops in France are bullish and have stated that they intend to increase pro- duction by 15%. Transport costs could also be a major issue that
JUNE 2017 • ANGLIA FARMER 35
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