BRITISH SUGAR beet growers and processors should remain in business after reform of the EU sugar regime, but others will fall by the wayside.

New analysis by the EU Commission suggests that EU production will drop from just over 20m tonnes currently to 12.4m tonnes by 2012/13.

This is the direct consequence of the 39% price cut it is proposing and the €730/t (£500/t) restructuring aid it is offering to decommission inefficient factories and surrender unwanted quota.

The analysis looks at the break-even price of sugar production in all sugar-producing member states.

On this basis, the commission expects growers and processors in Italy to be the first to drop out, as the sugar price falls below €550/t (£380/t).

A further €50/t (£34/t) drop and Ireland, Portugal, Greece and parts of southern Spain cease to be viable.

By the time the price gets down to the new reference level of €386/t (£266/t), only France, Germany, the UK, Poland, Belgium, Sweden, Austria and Holland will be producing sugar at anything like their former levels.

The report even suggests there may be some increase in production in these countries if they succeed in bidding for a share of the 1m tonnes of C quota the commission wants to make available.

But UK sugar beet growers will have to boost yields and reduce costs to secure their future, the report adds.

Even though the combined production/processing costs put the UK in the “safe” zone, growers are still operating above the proposed minimum beet price of €25/t (£17/t).