2205 final report.pdf - Agra CEAS Consulting

IMPACT OF THE EU SUGAR REGIME ON BCCCA MEMBER COMPANIES
new sugar refining companies would effectively be maintained, thereby reaffirming any hold that the
refining sector may have on industry prices. The current differential in, and volatility of, the price for
industrial sugar between the UK and EU markets would be likely to remain. As such, the current
rate of mergers and acquisitions in the UK sugar using sector would tend to continue at a similar rate
as has been the case in recent years and further divestments are likely to move production outside
the UK. This continued process of concentration would be likely to result in a further significant
reduction of employment in the sector. This is consistent with the findings of our survey of UK
BCCC manufacturers.
Consequently, the only reform options which allow an improvement in the competitive nature of the
sugar supply chain are those that result in the elimination of production quotas. If the level of
merger, acquisition and divestment activity is to be reduced to a sustainable level, then the ‘price
reduction’ and ‘liberalisation’ policy options would appear most suitable. Moreover, econometric
analysis has shown that both these policy options result in a net welfare gain for the industrial sugar
using sector.
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