Sugar Talk Sugar Talk Sugar talk logo

UK sugar import tariffs explained

15/06/2023 By Ben Eastick in Featured Consulting, Market news, Supply chain

The UK is outside of the European Union (EU), so is free to negotiate and set its own import tariffs. As a sugar deficit market, which means we consume more sugar than we produce, import tariffs can have a significant impact on sugar prices. This has a knock-on effect on the cost of the ingredients industrial food and beverage producers buy. In this blog, we explain the UK import tariff regime post-Brexit.    

UK sugar production cannot meet demand meaning tariffs are important

We do not grow enough sugar beet to supply our domestic demand of 1.7 mln tonnes for basic white crystalline sucrose, or table sugar. Also, because of our climate, we can’t grow sugarcane. Essential industrial sugar ingredients such crystalline sugars, like demerara and muscovado, and food grade liquid molasses can only be produced from sugarcane.

As a result, around half the sugar we consume in the UK is imported from other European beet growing nations and sugarcane-producing countries in tropical and subtropical regions around the world.

This means that import tariffs can be disproportionately important as they directly, and substantially, impact the cost of ingredients in the many food and beverage products in the UK shopping basket that includes sugar.

Sugar tariffs pre- and post-Brexit

UK raw sugar import tariffs have changed since Brexit when the UK left the EU to allow more tariff-free sugar imports

Prior to leaving the EU, the UK was subject to the trading bloc’s complex import tariffs, the EU’s Common External Tariff (EUCET). Depending on many variables, including origin, product type and how it will be used, these import duties could vary between €98 per tonne for raw sugar to be refined into white sugar, €339 per tonne for raw sugar to be used in manufacturing, and €419 per tonne for raw sugar to be used for direct consumption, such as demerara in packets in the supermarket.

Under EUCET, unrestricted imports of raw sugar can be imported from Least Developed Countries (LDCs), African, Caribbean and Pacific Countries (ACPs), Economic Partnership Agreements (EPAs) and Everything But Arms (EBAs), making these regions a favoured source of supply.

Clearly, sugar imports subject to higher tariffs resulted in higher costs for food manufacturers, particularly those using sugarcane-based sugars who have no choice but to use imported sugar. Sugarcane is not grown in industrial quantities in the continental EU, so must be imported. We say continental EU, as the French departments, such as Guadeloupe and Reunion, are technically classified as being in the EU, and the EU covers the transportation costs of imports.

On formally leaving the EU on 31 January 2020, a new tariff regime came into force that replaced EUCET, the UK Global Tariff (UKGT). Initially, like much legislation in the newly independent UK, in early 2020 the UKGT sugar import tariff regime closely mirrored the EUCET.

However, there are some exceptions, and 260,000 tonnes of tariff-free raw sugar can be imported from sugarcane-producing countries outside the LDC and ACP regions. Called the Autonomous Trade Quota (ATQ), this enables the UK to import more tariff-free sugar than when it was part of the EU. Compare this to 1973, before the UK joined the European Common Market, when the UK imported 2.1 mln tonnes of raw cane sugar, of which half a million tonnes came from Australia.

Raw sugar imports into the UK that are outside the ATQ quota, not covered by free trade agreements, and do not come from LDC and ACP regions face import duties of £280 per tonne for refining or £350 per tonne if used for direct consumption. 

The impact of free-trade agreements on sugar tariffs

Post-Brexit the UK sets its own tariffs and Free Trade Agreements that increase the amount of duty free sugar that can be imported.

In addition to the freedom to set import tariffs independently now the UK is outside the EU, the country can negotiate free-trade agreements (FTAs) with non-EU countries. Since January 2020, several agreements with other countries have been signed, most notably – for sugar at least – the UK-Australia FTA.

This is significant as it will eliminate sugar tariffs over the next eight years, and the agreement starts with a duty-free quota of 80,000 tonnes, growing each year to 220,000 in the final year eight. After eight years, sugar imports from Australia will be tariff free.

Australia is a major producer and exporter of sugarcane, shipping 80% of its 4.2m annual tonnage (22/23 production) overseas, so represents a potential source of raw cane sugar for the UK market.

Supply from Brazil, the world’s largest producer of sugar, is now part of the UK tariff-free quota. It is the largest raw sugar supplier to the UK with 161,000 tonnes in 2020/21, compared to 90,000 tonnes in 2019/20.

Future expansion of the ATQ and FTAs, perhaps with the second largest global producer India, may lead to further tariff-free import quotas that could benefit the UK food and beverage industry.  

What do new UK tariffs mean for sugar sourcing and costs?

When part of the EU, tariff-free supply from LDCs and ACPs was an obvious choice for UK importers. Now, with enlarged duty-free tariff quotas applying to any country of origin, alongside the Australian and other FTAs, there is greater producer choice for UK importers, ultimately meaning a greater security of supply.

The architects of Brexit anticipated significant cost advantages when importing sugars outside of EUCET, but due to many factors those advantages have yet to manifest. As highlighted in the latest global sugar market report, poor growing conditions combined with a pandemic-induced shipping and logistics crisis and the Ukraine war, which are impacting many agricultural commodities, have led to higher sugar prices.  

Ragus sources and supplies high quality pure sugars for our customers, from locally produced beet sugars to cane sugars from suppliers across the globe. To learn more about our pure sugar products, contact a member of our Customer Services Team. For more sugar news and Ragus updates, keep browsing SUGARTALK and follow Ragus on LinkedIn. 

Ben Eastick

A board member and co-leader of the business, Ben is responsible for our marketing strategy and its execution by the agency team he leads and is the guardian of our corporate brand vision. He also manages key customers and distributors.

In 2005, he took on the role of globally sourcing our ‘speciality sugars’. With his background in laboratory product testing and following three decades of supplier visits, his expertise means we get high quality, consistent and reliable raw materials from ethical sources.

View more