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Major expansion of the ‘fair trade’ sugar market

29 March 2008

On February 23rd 2008 Tate & Lyle announced its decision to convert its granulated white-cane sugar brand to ‘fair trade’ sugar by the end of 2009. A further 22 products will subsequently be converted, until 100% of Tate & Lyle’s retail cane-sugar range is ‘fair trade’. The move has been described as ‘the biggest ever “fair trade” switch by a UK company’. Currently the switch does not include industrial sugar, although there are ‘long-term ambitions’ to include its industrial supplies as well.

The immediate beneficiary of this move is Belize, where the plan is to buy between 50,000 and 100,000 tonnes in the first year, paying a premium of US$60 per tonne, benefiting some 6,000 smallholder farmers.

Editorial comment

This kind of corporate response reflects in part the growing market fragmentation in Europe, the increased competition on domestic sugar markets arising from the EU sugar-sector reform and the need to innovate to maintain and enhance market share.

The sourcing of the ‘fair trade’ sugar from Belize reflects the smallholder-based production system in operation and the level of smallholder participation in the milling process. In southern Africa sourcing ‘fair trade’ sugar is made more difficult by the pattern of corporate ownership and dominant role played by large-scale producers.

‘Fair trade’ represents one of the ‘luxury purchase’ components of an increasingly diversified and differentiated EU sugar market, which ACP suppliers will need to begin to target if they are to move away from a dependence on undifferentiated EU raw-sugar markets where prices are rapidly declining.

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