Realist, not conformist analysis of the latest financial, business and political news

But We Want Free Trade *In Order* To Kill Sugar Beet Production

The farmers have been ripping off the workers for far too long.

The UK now allows in some cane sugar, free of duty, to compete with domestic production of sugar from beet. OK, that’s good, that’s what we want to be happening. Well, except those producing beet to make sugar from of course:

At the end of last year, the Trade Secretary, Liz Truss, moved to unilaterally allow 260,000 tonnes of raw cane sugar to enter the UK in 2021. British Sugar says this is effectively a subsidy to its Docklands nemesis, which was sold by Tate & Lyle to US group American Sugar Refining in 2010.

“I don’t understand why they’ve singled out this one American company for special treatment,” says Paul Kenward, managing director of British Sugar.

They haven’t. Tate is the only refiner of cane sugar in the UK. So, the effect of the waiver is to free the import of cane derived sugar.

The effect of which:

The battle highlights a key challenge for the Government: does it believe in protecting British farmers and production, or fighting for an idealised free market? It is also a personal headache for Truss as Europe’s biggest beet refining factory is in her constituency.

Britain will gradually drop tariffs on Australian cane sugar imports after striking an outline deal with Canberra earlier this year. Critics of the tariff reductions warn further deals in that model could feed through to cheap cane sugar imports that would undercut English beet farmers.

Yes, to undercut British production.

Run this around the other way. The restrictions – tariffs, quotas – mean consumers have to pay more for their sugar. To keep those British producers in business. That’s the point of them. The point of removing the tariffs is to make life cheaper – therefore better – for British consumers.

“What happened in 2020 is very raw and sore with the growers,” says Michael Sly, chairman of the National Farmers Union (NFU) sugar board.

British Sugar insists an improved deal will be reached, but it’s a fall from grace for beet, which has a strong history of price and production regulation that used to make it among the closest thing farmers had to a safe bet.

A process of deregulation under the EU, and the UK’s post-Brexit trajectory, mean it is exposed like never before.

Now, farmers seem less certain, with many considering walking away from beet entirely. People are “very seriously questioning whether it’s got a place on the farm at all,” says Clarke.

Yep, that’s the very point. If beet sugar is uncompetitive against cane – it is – then we’d like British farmers to be growing something else and we get our sugar from cane. So, folks moving out of beet farming is the express point of removing the tariffs. This is why we’re doing it, it is not a mistake.

But there’s always one, isn’t there?

British Sugar, for its part, insists it is not afraid of a fair fight.

“I already compete on a tariff-free basis with sugar from France, from Germany, from the Netherlands, which is incredibly efficient,” says Kenward. “I have no fear about that – I’m happy to compete. The only bits that do cause me concern are those bits of the market which are distorted.”

No, we’ve just removed a distortion.

But rather more importantly. Competition comes from different ways of doing things, not just among those doing the same thing. That competition from the Netherlands etc is competition from other beet farmers and processors. “I’ll compete with them but not the others” is akin to the horse breeder insisting that he’s fine with the variance of genetics but he bain’t holding with them damn cars for moving people around.

Sigh. This being, of course, the way the world progresses, better technologies replacing worse…..

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decnine
decnine
2 months ago

However did the ‘poor’ beet farmers manage before UK joined the EU?

john77
john77
2 months ago
Reply to  decnine

They grew wheat or barley or beans or peas (now they also grow subsidised maize and subsidised oilseed rape that causes asthma).

Sugar beet is grown on rich soils that can be used for better things now that we are not governed by the EU’s CAP

Michael van der Riet
Michael van der Riet
2 months ago
Reply to  john77

For example cannabis viva cannabis.

john77
john77
2 months ago

Look up the origin of the word “assassin”

David
David
2 months ago

It is interesting that the Government with one hand is making sugar cheaper whilst thinking about taxing it to make more expensive.

Boganboy
Boganboy
2 months ago
Reply to  David

Yeah.

Since I’m an Aussie I have no problem with the UK buying Aussie, or indeed anyone else’s sugar. It doesn’t seem to me to be a vital substance like petrol, where I don’t trust the fuckers who sell it in the slightest.

TD
TD
2 months ago

Tim’s overall point is, of course, quite correct, but it seems something else is at play. The argument that local industries should be protected, and consumers be damned, has always had a lot of support (consider the Canadian dairy industry). To the extent these industries could afford the lobbying and political contributions, they could garner the political support to defend their privileges from those darned foreigners and their cheaper (racing to the bottom) products. Now it appears the UK sugar beet industry can no longer afford to pay for such protection, which, without bothering to look up production stats, seems… Read more »

john77
john77
2 months ago

The Battle of Waterloo was 1815, so the principal reason for growing sugar beet in what became the EU disappeared *more than two hundred years ago*. There was a *tiny* sugar beet industry in the UK before we joined the EU – its subsequent growth is wholly a result of the subsidy created to protect French consumers from a repeat of Lord Nelson’s blockade of imports from the French West Indies. Freeing up imports of cane sugar from relatively impoverished third world countries will do something to offset Johnson’s short-sighted Aid cut and will free up land to grow more… Read more »

Boganboy
Boganboy
2 months ago
Reply to  john77

I agree with all of this; except of course the bit about foreign aid.

John B
John B
2 months ago

“I already compete on a tariff-free basis with sugar from France, from Germany, from the Netherlands, which is incredibly efficient,” says Kenward.

Disingenuous wot.

Being part of a protected cartel is not competition with other cartel members.

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