The vote to leave the EU has sparked a clash between sugar-cane importers and farmers producing homegrown sugar beet. Is this bitter skirmish a microcosm of the big battles to come?

Keeping Britain’s sweet tooth satisfied is big business. Great dunes of sand-coloured raw cane sugar from the tropics are piled to the rafters at Tate & Lyle’s processing warehouse in east London. The equivalent of eight days’ worth of national sugar consumption occupies a surprisingly large volume of Thames dockside and fills the air with the heady smell of treacle.

As Britain gets to grips with the prospect of life outside the European Union, the contents of this warehouse have taken on a special significance. Recently, a successsion of Tory ministers have come here to inhale the seductive scent of free trade. A pair of size 9 safety boots loaned out to visitors still bear the name of food minister George Eustice, who toured the same squidgy mounds of unprocessed raw material earlier this month to learn what might flow in once the UK leaves Brussels trade rules behind. None of the government visitors can match Brexit secretary David Davis who – in a little-known career footnote – spent 17 years working for Tate & Lyle before becoming a politician, much of it battling against what its current American owners regard as the tyranny of European sugar regulation.

Tate & Lyle was one of the only large employers to campaign openly for Brexit during the referendum and, after Theresa May invokes Article 50 on 29 March, sugar will be on the frontline of the upcoming battle over Britain’s economic future.

The reason lies in the EU protection afforded to Tate & Lyle’s company’s arch-rival British Sugar, which uses a very different technique to make a chemically identical product. Its brand of white crystal, Silver Spoon, is made not from imported sugar cane, but from sugar beet grown on farms in the east of England.

One might think the Brexiteers’ promise of “taking back control” of Britain’s economic destiny would favour domestic producers such as British Sugar over foreign importers, such as Tate & Lyle.

Yet sugar beet production has now become a symbol of protectionist European agricultural policies that many Tory hardliners hope Britain will leave behind. Though health campaigners would like to see the price go up, not down, new opportunities to buy cheaper commodities from the rest of the world have made the sugar industry a stark example of a wider debate over whether free trade or farming should be uppermost in the mind of the UK government.

It is not the first time sugar has divided us from the continent. Extracting sucrose from beet on an industrial scale is said to date from the Napoleonic wars when Britain blockaded shipments of cane from tropical growers, and Napoleon set his scientists to work finding alternative ways of keeping sugar on the shelves of Europe. France remains the largest and most efficient grower of beet, but the crop’s influence is now felt across an EU that protects producers with quotas and subsidies, and limits sugar cane imports through punitive tariffs.

Where sugar beet reflects the earthy, continental side of Britain’s character, cane has colonial roots: an ocean-going reminder of sunshine in the Caribbean and Australia, but also the darker history of Britain’s part in the slave trade.

Facebook Twitter Pinterest Tate & Lyle sugar, made from imported sugar cane. Photograph: David Levene/The Guardian

“Out of the strong came forth sweetness” – the Old Testament riddle used as a marketing slogan on the front of tins of Lyle’s Golden Syrup since 1885 – has become a rallying call for those who see their country shaking off the mud and rediscovering its imperial swagger. On British farms, such sentiment is met with growing horror. Despite being home to some of the country’s most ardent leave voters and fertile farmland, the area around Peterborough would be hard hit if extreme free-traders succeed in persuading the government to abandon tariffs on world imports just as they lose tariff-free access to European export markets and agricultural subsidies.

“There is a dawning concern,” says Michael Sly, whose family have been farming in the Fens for more than 300 years and who now also chairs the sugar board of the National Farmers Union. “There is a lot of work being done on a spreadsheets around here as people work out what this would mean. Some are hoping that the fall in the currency will help cushion things [for exporters], but it hasn’t dawned on everybody yet that costs go up, too.”

Not only has sugar beet been an unusually reliable source of income for 3,500 of Britain’s arable farmers, but its broad green leaves are an important rotational crop in between soil-sapping wheat. If they are forced to compete head-on with what the NFU regards as artificially subsidised cane sugar from producers places in places such as Brazil and Thailand, it fears the economics of an industry supporting 9,600 jobs will unravel. The NFU accuses many cane-producing countries of dumping exports at prices below their true cost of production because governments offer various complicated farm subsidies. But some of these claims, particularly in Brazil, are disputed.

“When we talk about free trade, we have to remember that it is a utopian value,” says Sly, recalling past experiments with taking on the world’s lowest price that ended in the return of a degree of agricultural protection. Imperial Preference was a form of trade protection provided to farmers in the British Empire in the 1930s after unfettered free trade left lots of them bankrupt.

From such debates in the early years of the last century, to the corn laws of the century before, agricultural trade disputes have long played an outsized role in British politics. But the fear is that 40 years of outsourcing the issue to Brussels has left Whitehall ill-equipped to navigate the complex challenges ahead.

“I detect in much of government and the civil service an ideological bent in favour of free trade,” says William Martin, who grows beet on a 1,000-acre family farm near Ely, Cambridgeshire. Yet he claims it would be “extraordinarily naive” to translate this into a unilateral dismantling of import tariffs when Britain finds itself on the other side of fortress Europe. “If you are going to surrender agriculture, at least get something back for it, rather than just abandoning it,” he adds.

Facebook Twitter Pinterest Tate & Lyle sugar factory, Silvertown, east London. Photograph: David Levene/The Guardian

What the NFU and British Sugar would prefer to see is the fabled “level playing field” – a system of trade deals with the rest of the world that takes into account the implicit and explicit subsidies enjoyed by nearly all farmers.

Though the efficiency of the British beet industry has soared to the point where it claims yields per acre are higher than cane growers manage in the warmth of the tropics, it remains a precarious business. The heavy crop cannot be grown profitably if it is more than 50 or 60 miles away from one of British Sugar’s refineries. Even then, its farmers claim the burden of living in a high-wage economy means it is unfair to pit them against surplus cane that is dumped on the world market below the average cost of production by developing economies.

“If we are living in a higher-cost economy than Brazil, and as a society we value things that those higher costs support, then a degree of tariff protection to make that sustainable is legitimate,” argues Martin. “In an ideal world run by rational people, that is what tariff barriers used sensibly can help to balance out.”

It would be wrong to characterise Britain’s beet farmers as wishing to cling to the protectionist coat-tails of the French forever, though. Regardless of Brexit, the sector is excited by the current dismantling of EU production quotas, which means it, too, can begin to eye export markets and take advantage of bumper crops that previously had to be put in storage if they went over prescribed limits.

‘We don’t want to go back to the 1960s and 70s and the very corporatist policy of trying to manage markets,” says Paul Kenward, managing director of British Sugar. “We think that would be a retrograde step. But we equally don’t want to go unilaterally to an ultra -free environment. If we are the only country in the world to have no trade protection, then we will be the dumping ground for the world – not just in sugar, but in various other things.”

Facebook Twitter Pinterest Sugar beet harvest. Photograph: Bloomberg/Getty Images

For Tate & Lyle though, the so-called liberalisation of the EU sugar regime has proven to be the worst of all worlds. Where once Britain’s 2m tonne-a-year market for sugar was met equally by Tate & Lyle’s cane and British Sugar, the scale has tipped toward beet of late. Growing imports from Europe challenge both, and mean Tate & Lyle’s Silvertown refinery in east London is operating at barely half its capacity. Annual output has dropped from 1.1m tonnes to around 500,000.

With daily sugar consumption roughly stable at 5,000 tonnes a day despite changing diets, the rest of UK demand is now met by increased beet production by British Sugar, which has 55% of the market and claims to bring £300m to the rural economy by processing 8m tonnes of sugar beet into 1.2m tonnes of sugar a year at four factories in the east of England.

Tate & Lyle claims its raw material bill is inflated by €40m a year due to EU tariffs and quotas. In theory, it is still allowed to import zero-tariff sugar from a handful of designated markets such as Fiji, Belize and Guyana and that are seen as supporting international development goals. But in practice, Tate & Lyle executives claim that this restricts its ability to tap into the global market price and says the EU-generated cost on each of the giant cargo ships that pull up at its wharf on the Thames can reach €2-3m a time.

A limited amount of sugar can be imported into EU states at a tariff of €98 per tonne from larger countries such as Brazil and Australia. The rest of the world faces almost 100% duties of €339 per tonne – something Tate & Lyle hopes could disappear entirely if Britain strikes new free trade deals once it leaves the EU. Crashing out without a deal with Brussels would mean British beet farmers would in turn be on the wrong side of steep new tariffs for exporting into Europe.

Tate & Lyle says it does not mind how the needs of farmers and developing markets are catered for in future so long as it can compete “fairly”. But scratch beneath the surface of the polite talk about there being room for everyone and it is evident that a pitched political battle is already underway.

The NFU complaints about Brazilian cane dumping are dismissed as a Fenland fantasy by Gerald Mason, the loquacious senior vice-president of Tate & Lyle Sugars. “The farmer’s take on life is: ‘We would like to be able to export all of our products free of tariffs to all countries of the world, but we don’t want anything coming back in because it’s all unfair’,” he says. “When you are a member of the EU, you can hide behind all the other farmers, but in [a post-Brexit] UK, that debate is going to be fascinating.”

“It’s all to play for,” agrees farmer Martin. “We are coming out of a system that we know … and to a large extent have benefited from. It is absolutely unclear what happens next.”

For Tate & Lyle, here lies its appeal to Brexit-supporting politicians. Though the sugar refineries business was bought from Tate & Lyle plc by American Sugar Refineries Inc for just £211m in 2010, a company whose family name still adorns art galleries across the UK has successfully branded itself as a plucky British champion.

Facebook Twitter Pinterest Beet harvest, Diss. Photograph: Bloomberg/Getty Images

Mason says finding himself on the leave side of the referendum debate was “pretty lonely”. “You didn’t find many people in our situation saying: ‘Europe isn’t working, it would be better if we had control ourselves,’ but most businesses are afraid of change. They have traded the way they have for 40 years. For us we had to have change; the status quo was going to kill us.”

Brussels can also be a convenient excuse. An elderly industrial plant in one of the most expensive cities in the world is not an easy asset to run at half capacity, though Tate & Lyle likes to boast of its continued investment and 850 employees in what is one of the last large manufacturing sites in the capital.

The firm’s 45-acre site at Silvertown may have inspired authors and politicians alike to romanticise its 130 years of sweet refinery aromas, but it is an image dismissed by British Sugar. “If you are importing raw sugar you are importing a 95-96% processed product and you are doing a finishing process and then bagging it,” argues Kenwood. “They have got great brand heritage but Gerald [Mason] reports to a guy in Miami, and it’s an American refiner. They have done a superb job at positioning themselves as British but I think we have got more call on that.”

Facebook Twitter Pinterest British sugar beet. Photograph: Bloomberg/Getty Images

Perhaps the trump card for Tate & Lyle, though, will be the sympathetic ear of the minister at the heart of the Brexit process. David Davis, secretary of state for Exiting the European Union, has not visited in years, and civil servants are keen to distance their boss from the company where he rose through the ranks in the 1970s and 1980s. Yet those acquainted with his time restructuring the business insist it has left an impact on his worldview.

“When we joined the EU we had six refineries and we were supplying about two-thirds of the UK sugar market,” says Mason. “Immediately, the EU cut the number of countries we could buy sugar from and ever since it has got worse. [Davis] was at that first wave … it would have been his first experience of Europe. He would have been right at the coalface of making people redundant, closing factories and all that sort of stuff as a direct result of us joining the EU.”

As Davis and his team decide whether to put Britain back on a course looking out to sea, his time on the dockside will be fresh on his mind.