The falling world sugar price has failed to translate into cheaper sugar for either UK food manufacturers or shoppers.

Sugar prices, traded in New York, have fallen from just under €500 a tonne last summer to around €350 a tonne, driven down by good harvests in Europe and Thailand.

However, prices in the UK have hovered stubbornly around €700/tonne because the duty paid to import sugar from outside the EU has increased.

From less than €150 a tonne in July last year, the tariff rate rose to a high of €313 this month. The tariff rate is determined by an auction, where the EU sells the right to import sugar to whoever offers to pay the most, so when the price of imported sugar comes down, demand increases and the duty level is bid up.

“The more the world price does down, the more duty goes up,” says Ian Bacon, president of Tate & Lyle Sugars.

Inflated prices benefit EU sugar producers who would otherwise struggle to compete because of their higher production and labour costs.

The high price of sugar bought via the auction system allows domestic producers to charge higher prices. Following a bumper crop, that means bumper profits. As a result, Investec recently increased its EBIT forecast for ABF’s sugar business this month to £454m, a 44% increase on last year.

It is a different story for manufacturers and sugar cane refiners. Investec linked Danone’s recent profit warning to the high sugar price. And Tate & Lyle Sugars, reliant on imported sugar, announced 30 job cuts in February as it could not afford to keep production at its Silvertown refinery at full capacity.

The average retail price of sugar has also increased: 1kg of sugar is up 10-20% across the top five supermarkets [BrandView, 52w/e 28 June].