News

July 17, 2008

What’s Happening In Sugar To Make Tate Quit?

By Sally White

Another bit of City history has gone. UK sugar giant Tate & Lyle has sold off its sugar trading arm to a US group with an equally long market pedigree – one of the international grain titans, Bunge. Without Tate’s backing London sugar futures trading would never have got going again in the 1950s after markets’ closures in the war years. By the time the group set up its own trading arm in the 1970s business in the market was booming. Then the sugar business all changed in Europe with the EU sugar regime. The EU believed in supporting local sugar beet production, incidentally pushing up the price of sugar to EU food companies so that they were paying two or three times’ world market levels. The EU’s sugar regime consisted of a price support system, a quota system, and a separate system for selling sugar to “third” (non-EU) countries.

Last year everything changed again, after 2006 legislation, with the idea of cutting production to sustainable levels. Included were restrictions on exports from EU sugar refineries. That, plus the sale of its US sugar business, savaged Tate’s sugar trading profits. Plus, enthusiasm for sweet things is not what it was. Not for sugar, nor even for the sweeteners in which Tate’s has made a speciality – doubts have been cast on just how healthy sugar substitutes are, even on corn syrup. Times are...