Sugar Industry

Brexit and African Trade

As Britain prepares to leave the EU, the UK Government through its new trade agreements with developing countries, can support Britain’s goals for international development and promote global trade as the most important driver of economic growth in low and middle income countries.

Brexit is an opportunity for the UK government to create real preferential access for sensitive agricultural sectors in developing countries enabling the agriculture industry to become, once again, an engine for development.

A recent EU commission report boasted that the EUs agriculture industry relies on EU support payments for 46 percent of its income and from an annual agricultural support budget exceeding 58 billion euros. This is not simply subsidy support for farmers but rather support for large-scale industrial producers within the agricultural sector.

Recent changes to EU sugar subsidies through “Voluntary Coupled Support” pay Europe’s farmers to grow sugar beets, seriously impacting the trade in sugar that is the backbone of national economies in Africa and elsewhere. Given that there now are no restrictions on how much tonnage can be marketed internally in the EU, the available market for developing country sugar industries in the EU has been reduced and prices in the EU are now below the equivalent price on the world market.

The EU has a long and sorry history of practicing mercantile colonialism by massively subsiding its agricultural industry. The EU encourages and supports over-production in sugar and poultry and then dumps its surplus production in Africa and other developing regions.

The consequences of this approach have been tragic for rural communities in Africa. The poultry industry has been devastated in Cameroon, Ghana, Senegal, and now the South Africa poultry industry is severely threatened.

Mozambique, Namibia, Malawi and Swaziland are seeing their sugar industries being devastated by the closure of Europe’s sugar market as the EU provides massive support for the over-production of sugar beets while at the same time imposing tariffs on sugar from sugarcane.

Britain can show its leadership in both international trade and in development by structuring a trading system that supports sustainable sugar prices in low and middle-income countries and by recognizing the developmental benefits of the sugar trade.

This is not about subsidizing foreign sugar producers but by offering preference in a world sugar market that is becoming increasingly distorted by Europe’s subsidies. Britain can show its leadership by limiting is dependence on imported sugar from the EU and at the same time recognizing the role that sugar plays in agricultural and rural development. Britain can meet its need for imported sugar and advance its leadership in international development by supporting the role that sugar plays in the national economies of Africa and the Caribbean.

The expansion of the cane sugar industry in developing countries goes hand in hand with the establishment of small grower schemes and projects. Sugar production contributes to large-scale employment in rural areas. The multiplier effect on employment and the economy is significant. Sugar Industries provide much needed export earnings and tax revenues.

Britain needs to consider the significance of the sugar industry in Africa. In Mozambique sugar production from 6,000 metric tonnes at the end of the civil war in 1992 to 422,000 metric tonnes in 2014. This increase was under-pinned by preferential access to the EU market. On average over the last five years 55 % of Mozambique’s sugar production was exported to the EU. Today 33,000 are employed within the industry in rural areas, and an estimated 250,000 people are dependent on sugar for their livelihoods. These livelihoods are now at risk through the Europe’s policies of heavily subsidizing over-production.

In Swaziland sugar represents 13 % of GDP and 35 % or private sector employment. More than half of Swaziland’s sugar exports have been to the EU but now this market is closing rapidly because of Europe’s subsidized over-production. Similarly 26 percent of the sugar produced in Malawi was sold to the EU now over 11,000 full time jobs are at risk.

Support payments for sugar beet production have become a symbol of protectionist European agricultural policies that many hope Britain will leave behind. As Britain begins to assess and formalize international trade policies independent of the EU it has an opportunity to recognize the vulnerability of certain agricultural sectors of African countries and to consider the devastating impacts on rural communities of distorted and heavily subsidized global markets.

More than half of the Africa’s population is employed in agriculture. Long ago Britain walked away from the excesses of its colonial past. Europe has not. In future trade negotiations Britain must recognize the sensitive nature of both the poultry and the sugar sector in its trade agreements in Africa and other developing regions. Britain has a glorious opportunity to provide special and differential treatment of sensitive agricultural sectors and to show its leadership in building an honest and transparent new world order in international trade.