26 March 2018
A blog from our Strategy & Business Development Director, Daniel West
Sugar is one of the most distorted agricultural commodity markets in the world; currently dominated by six influential producing countries, each accounting for a portion of the world’s supply. These countries have, by and large, developed a mix of policies and subsidies to support domestic production.
As we prepare for a post Brexit world, we need a UK sugar policy which allows our sugar industry to remain globally competitive, but also recognises the benefit continued access to this market provides to Less Developed Countries (LDCs) and African, Caribbean and Pacific Countries (ACPs).
Modelling the sugar industry to support informed policy decisions based on robust evidence
Any successful future UK sugar policy will need to reflect the complexity of our market. We want to play our part in helping the government make Brexit a success by providing objective data and analysis to help inform the choices they will have to make. To this end, AB Sugar took the decision to provide an unrestricted educational grant to Flint in partnership with The European Centre for International Political Economy, to investigate the post Brexit landscape in global sugar trade. To our knowledge, this is the first time a report of this kind has been published on UK trade in a liberalised sugar market that includes both qualitative and quantitative evidence. This report titled ‘UK sugar trade in the global market after Brexit’ doesn’t necessarily reflect the views and opinions of AB Sugar, but it is a sound starting point to consider the impact different decisions could have on the UK sugar sector post Brexit.
What’s the evidence?
The conclusions from the report highlight the extent and size of the distortions within the global sugar market and their implications for the UK, including:
- An average value of subsidisation found in the six influential sugar producing and exporting countries examined of €110 per tonne
- That if the UK unilaterally cut tariffs, the UK beet sugar industry could be placed at a significant and unfair competitive disadvantage
- The importance therefore that the UK takes appropriate steps to ensure that the UK beet sugar industry can compete on an equal footing with these subsidised sugar producers and exporters after Brexit
- It would be both most straightforward and most effective for the UK government to replicate the existing EU trade arrangements after Brexit
- If the UK reproduced the current EU trade arrangements the consumer would not lose out; there would not be large effects on either price or availability
AB Sugar believes in both free and fair trade and that competition should always take place on an equal footing. UK sugar policy post Brexit should reflect this and we would ask the government when considering the future policy framework to:
- Ensure the UK’s future trading relationship with the EU on sugar is reciprocal with supply to and from each side treated the same
- Pursue a trade policy to the rest of the world that, as current EU tariffs do, allows the UK industry to compete on a level playing field recognising the fact that the global sugar market is highly distorted with most major producers supporting their industries
- Maintain tariff free ‘preferential access’ for LDC and ACP countries in recognition of the importance of this for their economic development
We hope this report is an important step in assisting the UK government to make a success of the new UK sugar policy.
To read a copy of the report “UK sugar trade in the global market after Brexit” published by Flint, in co-operation with The Economic Centre for International Political Economy (ECIPE), please download from here.