Sugar beet market changes will increase competition

Expert comment on how the free market might look post quotas

Saturday 30th September 2017 marks the end of the quota regime that has controlled sugar beet growing in Europe since 1968. Independent agricultural consultant Robin Limb and Simon Allen, senior lecturer at Harper Adams University, set out how the free market might look post quota.

The abolition of the quota system which has underpinned the EU Sugar Regime for almost 50 years, means there will be no limits on how much sugar beet processors and growers can supply to internal markets.

The move also means that the EU, as a whole, can produce as much sugar as it wants, export restrictions will be lifted and there will be no World Trade Organisation (WTO) limit.

However, the sector will 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.

This is where the UK’s decision to leave the EU complicates forecasts on how the industry will evolve in the long term.

Up until 2020 the UK government has pledged to continue to uphold the tariff barrier. But beyond that date, industry commentators are sceptical that it will be continued because of the UK government’s stated commitment to freer trade. Even if it were to adopt a suggested 10% tariff, this would not deter the big exporters from Brazil which could put the UK sector on the back foot when compared with its EU neighbours.

 

Click here to go to part 2 and part 3 of our Quota series

Sugar beet in a heap or clamp for storage
Sugar beet in a heap or clamp for storage
Sugar Beet Quotas 1 - Boxout
Sugar beet harvesting
Sugar beet harvesting