Sorry, but this is one of the things that seriously annoys me each and every year when it comes up.
Yes, East Ham in London tops the list with twice as much as the next ones, the Berwicks, a total of €763,726,965.82
And it all went to Tate & Lyle.
C Czarnikow Sugar Ltd only got €99,316,783.17 but then they are based in Islington where the soil isn\’t so fertile.
The information given is of course true….but horribly misleading.
I hope that readers here will have got their heads around the idea of tax incidence….God knows I\’ve belaboured the point enough. The person handing over the cheque isn\’t, necessarily, the person carrying the economic burden of the tax.
This can also be true of subsidies: the person cashing the cheque isn\’t necessarily the beneficiary of the economic joys of the subsidy. And this is so with these international sugar companies. And the secret is in that word \”international\”.
Tate & Lyle does two things (I\’ll leave aside their non-sugar based sweetners made from grains). It imports cane sugar and its precursors from outside the European Union, processes then into the sugar we put in our tea and then sells that sugar both inside the European Union and outside it. Secondly, it purchases sugar beet within the European Union, processes that into sugar and sells that sugar both inside the European Union and outside it.
One other thing you need to know. The European Union runs a huge subsidy programme for sugar beet growers within the European Union (some slightly old details here). The basic structures of this subsidy scheme are twofold:
1) Massive duties upon imports of sugar from outside the European Union…..some countries get a waiver from these as long as they sell at a certain minimum price.
2) Guaranteed high prices for farmers producing sugar and precursors inside the European Union.
So, what now happens to a company which buys in sugar and precursors from outside the EU to process and sell inside the EU? They must pay these very high import tarrifs, good, well done that man. And if they purchase sugar and precursors inside the EU then they must pay that massively high guaranteed price to the farmers. Again well done.
If they then sell the manufactured sugar inside the EU then nothing else happens. We\’ve defended the high EU sugar price and everything is sweet and lovely.
However, what happens if they then export that sugar that they\’ve either brought in and processed or bought and processed? They lose an absolutely bloody fortune, because the EU has, either way, made their raw materials cost two to three times the world price.
So what does the EU do? It sends them a subsidy cheque for their exports. This subsidy cheque is calculated to be exactly, and only exactly, the increase in costs imposed upon the companies by the import tarrifs upon cane sugar and precursors imported into the EU and the high guaranteed price paid to sugar beet farmers within the EU.
So who gains the economic joys of this subsidy? Tate & Lyle and shareholders? No, not at all: they\’re only being compensated for the costs that the system is imposing upon them already. Those who gain are
the sugar beet farmers in the EU.
They get protection against all that cheap and yummy cane sugar and also get their guaranteed price for sugar beet. The incidence of the cheque Tate & Lyle get isn\’t Tate & Lyle at all: it\’s that bloke eyeing up a top of the line Range Rover somewhere in Lincolnshire. That top of the line Range Rover which will be paid for by his fields of sugar beet.
You know, that sturdy independent yeoman that is the very backbone of England.
That we should abolish it all is clear and obvious. But not because Tate & Lyle makes a mint out of it, they\’re just the conduit, not the beneficiaries. But because if farmers cannot make money growing sugar beet in the European Union without subsidy then farmers should stop trying to grow sugar beet in the European Union.