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Sugar Production in the UK
IBISWorld, Sep 2011, Pages: 31
Too sweet: Domestic revenue struggles with high global sugar yields and low global prices
The Sugar Production industry has faced a number of challenges over the past five years. The United Kingdom continues to be at the mercy of the global sugar market and is highly susceptible to the fluctuations of production, supply trends, weather conditions and ultimately world prices. The EU sugar reform that came into effect in 2006 has had a further bearing on the industry due to production quotas, import tariffs and export refunds. Production of sugar beet across the European Union has fallen over the past five years, with some member states choosing to completely relinquish their quotas and opting to shift beet production for ethanol and other biofuels. Over the past five years, global crude oil prices have risen sharply, which has supported the increasing diversion to ethanol production and put further pressure on global sugar supplies. These factors have been intensified by government policies to increase the production and use of ethanol.
Further, the environmental effects of sugar beet production such as its relative high use of herbicides, deep ploughing and sub-soiling techniques have also had an adverse effect on area sown and final production. The industry has also undergone significant consolidation, with factory closures and high profile acquisitions such as Tate & Lyle’s becoming a subsidiary of US giant American Sugar Refining Inc in July 2010. In the five years through 2011-12, industry revenue is expected to increase by 0.3% per annum to total £871.4 million. In the current year, revenue is forecast to fall by 4.1%.
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