16 June 1995

Quota cuts could sour outlook for sugar beet

By Charles Abel

PROSPECTS for British sugar beet growers are not nearly as rosy as many think. The GATT deal will bring quota cuts, and pricing pressure is a concern.

That was the "realistic message" for growers at an Ipswich meeting organised by British Sugar last week, one of a series around the country.

The main threat comes from last winters GATT deal, explained Chris Carter, BS agriculture director. "MAFF seems to think it was a good deal and the NFU thinks it was all right. But British Sugar is a bit worried."

Concern centres on the 4.9% quota cut that could be imposed on the UK to meet the GATT goal of reducing subsidised EU exports from 3m tonnes to 2.5m tonnes within five years.

Fortunately, the cut is only half that planned, thanks largely to grower pressure, Mr Carter stressed.

But unless the surplus falls, through lower production, greater consumption or the accession of a sugar-deficient country like Norway to the EU, the reduction will come in progressively over the next five years, taking a 22,000t slice off the UKs 1.14m tonne sugar quota. "That is very significant." It will trim beet quota by 154,000t, or 2%.

Consumption drop?

If consumption within the EU falls the penalty could be "an awful lot graver". A 5% downturn in internal sugar use would mean a 52,000t sugar cut, equating to 360,000t of quota, or 5% off contracts.

Pressure on support prices is growing. Sugar users dislike their green £ variability and CAP planners want the crops profitability to balance better against other arable crops. EU enlargement could drive the price down and world sugar could also start coming in, explained Mr Carter.

Customer pricing pressure applies in both the retail and industrial sectors, explained Richard Rankin, sales and marketing director of BSs Sugar for Industry division. Almost a fifth of consumers now use artificial sweeteners, knocking 75,000t off the sugar market. And less home cooking has pushed sales towards industrial users.

They are increasingly looking to "no added sugar" products for a marketing advantage and to cut costs. Fizzy drink makers use 343,000t of sugar a year, more than any other user. But sugar adds 6p/litre to production costs, compared with 1.43p/litre for artificial sweeteners.

To stem the slump BS intends to improve its service to industrial users, getting more involved in developing the technical merits of sugar in food processing. It also aims to overturn public perceptions of sugar as a cause of obesity, tooth decay and nutrition problems.

Mr Carter stressed the firms commitment to growers. "We have a cracking sugar beet industry now. But we are going to have pressures and it is our intention to work extremely closely with you to make sure we stay competitive."

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