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2 October 2017

Welcoming a new era in the sugar industry

Welcoming a new era in the sugar industry

 A message from our CEO, Dr. Mark Carr

As one of the world’s largest sugar producers, we face, with confidence, the biggest re-write of European sugar policy ever, despite having the expectation that it will create one of the world’s most competitive and volatile markets.

Where are we?

Over the past decade, we have focused on preparing for the end of the European sugar regime and removal of quotas as part of a package of reforms introduced under the European Common Agricultural Policy (CAP). This has not been easy and has led us to making some tough choices, including the closure of some of our processing factories and cutting production capacity post the 2006 reform.

Through the difficult choices we have made, our hard work and determination has been rewarded and recognised. Today, we operate the lowest cost beet sugar industry in the world[1]. We have  created a great British beet sugar industry with some of the highest farm yields and our focus on efficiency has made British Sugar one of the most productive and customer focused beet sugar suppliers in the world, whilst UK beet sugar growers receive no subsidies for the sugar beet they grow. As part of getting to this position, we should acknowledge the UK Government’s resolve in seeing through changes to the CAP and the ultimate end of the sugar regime.

In Spain, Azucarera is the leading producer of sugar from both sugar beet and sugar cane in the Iberian Peninsula. Whilst remaining within the EU and the new liberalised market environment, they are in an excellent position to serve customers and extend their product portfolio.

In Africa, Illovo Sugar Africa, which is part of the AB Sugar group, is a significant contributor to the economy. It supports direct and indirect employment in rural areas, is a significant purchaser of agricultural raw materials, as well as being a sugar producer. It works with smallholder farmers to develop their agronomy and business skills to sustainably shape their local economies and communities.

What next?

To continue to grow and positively contribute to the socio-economic fabric of the economies and communities, of which we are part, we call on the UK Government when designing a UK sugar policy post Brexit, to ensure that it:

  • Looks forward, not backwards.  No return to 1970s quotas that undermine the progress in efficiency, competition and investment made since the two substantive reforms in 2006 and 2013.
  • The UK has a level playing field and is able to compete and trade as per the other 27 EU member countries (EU-27). This would mean reciprocity of any tariffs or standards applied.
  • Least Developed Countries (LDC) and African, Caribbean and Pacific (ACP) countries continue to receive quota free access to the EU market with preference maintained.
  • There is no unilateral reduction of EU sugar tariffs given significant state distortions in Brazil and beyond.  As we pursue free trade agreements, the structure of sugar tariffs should be changed with care and not sacrificed unilaterally.

How could we shape up?

If a UK policy is designed that enables us to build upon the investment we have made and the global capability we have established, we have the opportunity for our businesses to grow taking advantage of changing world sugar trade flows, capitalising on new export opportunities and newly emerging customer demands in our domestic markets.

Simultaneously, we will adapt our operations to take into account how technological, behavioural and consumption patterns affect everyone, from our growers through to our customers, consumers and people.

We have vast expertise and knowledge across our businesses to leverage and we are confident we will take every opportunity to become even stronger in this new era.

 

[1] LMC 2017 Report: Sugar & HFS Production Costs Global Benchmarking

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