2205 final report.pdf - Agra CEAS Consulting

IMPACT OF THE EU SUGAR REGIME ON BCCCA MEMBER COMPANIES
1. Introduction and objectives
1.1. Introduction
The EU CMO for sugar has remained largely unchanged since its inception in 1968. With the current
regulation expiring in June 2006, the European Commission has focussed discussions on a series of
possible reform options, acknowledging that there is considerable pressure for a new regime to
encourage and enable change in the sugar sector.
The Biscuit, Cake, Chocolate and Confectionery Association (BCCCA) represents all the leading and
many smaller manufacturers of biscuits, cakes, chocolate and confectionery (BCCC) in the UK. In all,
the Association represents more than 90 British businesses. The sector as a whole employs some
60,000 people and has annual consumer sales of around £8 billion (with companies contributing
around £1 billion in respect of these products in VAT receipts to the UK Exchequer).
However, there has been a steady decline in production and trade of BCCC products and
employment levels within the UK sector as a result of industry restructuring from a series of merger
and acquisition activities and the divestment of production facilities out of the UK. The reform of
the CMO for sugar therefore provides an opportunity to consider the options for reform and to
assess the impact of these options on the BCCC manufacturing sector.
1.2. Objective
The objective of this research is therefore to analyse:
‘the impact of the EU sugar regime on the commercial viability of BCCCA member companies
over a time scale of the last five years and the consequences for the future.’
The purpose of this analysis is to assist BCCCA to refine its case supporting a sugar price cutting
reform of the EU sugar regime on which a Commission proposal is currently under discussion in the
EU Council of Ministers. In particular, the study reviews the impact the regime has had and is likely
to have on employment and the trade balance in the sector since arguments on these points are
frequently put forward by those advocating a more limited and slow reform.
1.3. Structure of the report
This report is divided into two Parts, in line with the objective of the research as set out above
(Section 1.2). Part A assesses the impact that the current EU sugar regime has had on the UK
biscuit, cake, chocolate and confectionery (BCCC) manufacturing sector in recent years. An
overview of the current EU Sugar Regime is initially presented (Section 2) and then the impact of the
EU Sugar Regime on the UK BCCC sector is analysed in terms of its impact on the sugar price for
EU industrial users (Section 3.1.1) and UK industrial users (Section 3.1.2), its impact on UK BCCC
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