With quotas gone and Brexit looming, Robin Limb speculates on the outlook for the UK’s beet sugar industry.
UK beet growers have delivered yet another record-yielding crop during the 2017/18 campaign.
Despite the lacklustre late spring, the crop bounced back big-time to exceed all expectations. Combine drivers may have had a frustrating cereal harvest, weather-wise, but as far as the beet crop was concerned, it enjoyed almost ‘designer’ growing conditions in 2017.
Reports of yields topping 100 tonnes per hectare have been commonplace, and the previous record, set in 2014, has now been comprehensively blown out of the water.
The favourable weather which gave us such rich autumn colours benefited the beet crop, confounding all the pundits.
Equal amounts of sunshine and rainfall, coupled with a mild autumn and early winter, allowed the beet crop to maximise its potential. Unconfirmed estimates are for an average adjusted yield of 84t/ha.
To put these numbers in context, in 1982 a record yield of 50t/ha was achieved.
In 2005 this number was smashed at 60t/ha and in 2009, the magical watershed of 70t/ha was topped – despite many saying it could never happen. In 2014, this record was broken again, with recorded yields just shy of 80t/ha.
Despite February’s winter sting, with colder than forecast conditions, beet kept well in the ground and storage heaps, with no significant impact on factory performance.
At the time of writing (first week of March), prospects for an early drilling season look doubtful, but there may be more ominous clouds on the horizon.
Despite British Sugar being the sole UK processor, it cannot wield market influence, especially in a post-Brexit world.
Ultimately, it is the growers who hold the whip hand, as they can chose to do anything they wish with their production resources, unlike the processor, which substantially has only one option.
Relative crop profitability is currently in favour of sugar beet, and may continue so. However, it would take a brave person to predict what is around the corner.
So what of the future?
Sugar beet margins in 2017 were far more impressive than anything which came off a combine harvester, but past results are no guarantee of future performance.
Even before the UK elected to leave the European Union, market competition was already hotting up, with the prospect of unbridled production by major processors following the abolition of quotas.
Sugar is under attack on all fronts. The industry faces a constant barrage from single-issue pressure groups on why sugar is the main cause of childhood obesity, and we should all seek to reduce – if not cut out – our consumption.
The fact remains 80% of all the sugar in our diets comes from processed foods, rather than lifted manually from the supermarket shelf.
Granulated sugar is not just a sweetener, it adds bulk, texture, and preserving qualities to many food products, such as jams, cakes, confectionery, and biscuits, which is impossible using artificial sweeteners.
A tax on sugary drinks is unlikely to have any real impact on the consumption of such products, given many manufacturers have already voluntarily reduced their level of sugar use below the tax threshold of a 5% inclusion rate.
In the last 20 years, the market for fruit juices and blended drinks containing fruit juice has rocketed, mostly at the expense of sugary carbonated drinks, as consumers have been looking for an alternative which is considered healthier and ‘more natural’.
The truth, as many dentists will attest, is juices, even pure juices, are high in sugar. It just so happens those sugars are not the sucrose derived from sugar beet or sugar cane, but the fructose which naturally occurs in fruits and vegetables.
So is sugar just sugar?
Sugar beet is full of many useful materials: the roots are packed with sugar, and the fibrous pulp is widely used for animal feed. Less well known perhaps is the residues can be converted into fatty acids which can then be transformed into fully biodegradable bioplastics.
All too often we hear about the damaging long-term effects which sugar can cause our bodies.
However, scientists at the University of Bath have discovered a way of using sugar which could benefit our health.
A polycarbonate made from sugar, carbon dioxide and water is a new process which uses low pressures and room temperature to make plastic cheaper and safer to produce.
This new plastic is biocompatible which could make it the future for medical implants or to create scaffolds to grow replacement organs for transplants.
Making bioplastics from sugar is nothing new. It was once considered a radical, eco-friendly, yet unviable alternative to making plastics from fossil fuel by-products.
But nowadays, with a growing population, the notion of taking agricultural land away from food production has become as controversial as the continued use of petrochemicals. Sugar can be sweet after all, as it could have a promising future in the form of bioplastics.
Scientists claim it is strong, transparent and scratch-resistant, much like the traditional non-biodegradable version made using petrochemicals.
The key difference is an eco-friendly bio-based polymer which can be degraded back into carbon dioxide and sugar using the enzymes found in soil bacteria.
Storm clouds brewing
Outside the EU, and the sugar regime, life for beet growers will become increasingly uncertain and volatile.
On paper, British Sugar is one of the most cost-efficient and competitive sugar producers in the world, including cane producers.
The real threat in a post-Brexit market environment is the loss of import tariff protection, which we enjoy as EU members.
UK governments, regardless of colour, have repeatedly affirmed their commitment to open trade with little, if any, tariff barriers in the future. On a level playing field, this should ensure a continued and profitable domestic sugar industry, capable of standing its ground on the world stage.
Unfortunately, it may not be a level playing field once we are outside the protective comfort zone of the EU. Even with a nominal 13% World Trade Organization tariff on world sugar imports, this will be a relatively easy hurdle to clear for juggernaut exporters, such as Brazil.
Furthermore, despite the global competitiveness of the UK home industry, if surplus sugar is dumped on our doorstep at below cost of production prices, we could be staring down the barrel of a gun.
Major industrial users of sugar in the UK, such as Coca-Cola, will struggle to pay a premium price for UK sugar when they can source much cheaper imports, especially if it comes with a traceability and food safety tag stapled to the invoice.
NFU Sugar and British Sugar are working hand-in-glove to secure the best possible outcome for beet growers and processors, come the fateful day. Sadly, there is little reassurance to be gleaned from the vague promises of politicians in the run-up to Brexit. The easy profits from beet growing have probably gone forever. The industry is now living in a true commodity market environment.
Strengths: The UK beet industry is one of the most competitive in the world and should remain so, given a level playing field
Weaknesses: Vulnerability to a lack of tariff protection post-Brexit
Opportunities: Alternative uses for sugar, offering higher margin, if less volume, e.g. bio-plastics, pharmaceuticals
Threats: Predatory imports from major sugar exporters, such as Brazil and Indonesia