BRITAIN’S TWO main sugar businesses have warned that the EU’s proposed price cuts will wipe tens of millions of pounds off their bottom lines.

Brussels confirmed on June 22 that it wants to cut the reference price for sugar by 24% in 2006, rising to 39% by 2008, in the biggest ever reform of the EU’s sugar regime.

Associated British Foods, which owns British Sugar, the UK’s sole beet processor, said the impact on operating profits in 2006/07 would be £10m, rising to £40m the following year.

It predicted a cost reduction programme and new opportunities to import raw cane sugar would partly mitigate the effects of the reform.

Tate & Lyle, which imports cane sugar from developing countries, forecast profits £20m and £60m lower than usual in 2006/07 and 2007/08 respectively.

However, the sweeteners firm said greater sales of its value added product range would make up the shortfall.

It holds the lucrative rights to produce Splenda, a sucralose sweetener whose production has been far outstripped by global demand.

Iain Ferguson, chief executive of Tate & Lyle, said: “We are deeply concerned about the inequitable nature of the proposals and in particular the disproportionate and discriminatory reduction in cane refining margins.”

He predicted big changes in the final text of the reform, due to be agreed by November.