Sugar is ‘white gold’ again, but will Ukraine have enough?

Ukrainian sugar is helping offset the ‘sweet’ deficit in Europe. Ukraine’s sugar exports rose to 427,000 tonnes in a year since last October—and could have been even higher but for the government’s limit in order to keep some for domestic consumption.

Ukraine mostly exports sugar to Poland, Bulgaria, and Hungary—the very countries that unilaterally limit imports of Ukrainian grains and oilseeds. ‘White gold’, however, is an exception.

A sweet hole

The EU has a sugar problem: Domestic producers in France, Germany, and Poland have no raw materials because of the poor harvest that has plagued European beet for the second year in a row.

"Consequently, the total deficit of sugar in the EU countries at the beginning of the year was two million tonnes," Nazar Mykhailovyn, the head of the Ukrtsukor [Ukrainian Sugar] association, tells LIGA.net.

Ukrainian sugar producers saw an opportunity. They had to be able to deliver to Europe faster than the Brazilians, who supply sugar cane to European processing plants.

"By June, we were increasing sugar supplies to Europe. It reached 70,000 tonnes per month. But in May, the cabinet of ministers decided to block all sugar exports," says Mr Mykhailovyn.

Poland, Hungary, Bulgaria and Romania were the biggest buyers of sugar, he adds.

The cost of the ban

No one in the Ukrainian government officially called the decision to ban sugar exports a response to the embargo on Ukrainian grain imposed by Poland in May, later supported by several neighbouring countries, mostly Hungary and Slovakia.

The cabinet of ministers said the ban was necessary to react to an ‘abnormal’ increase in exports that threatened to lead to a shortage on the Ukrainian market.

However, Ukrainian sugar producers say they provided the government with a forecast. It says the current sugar stocks—over 500,000 tonnes—will be enough, and in the autumn, Kyiv will have one of the best sugar beet harvests in recent years.

Nevertheless, sugar exports from Ukraine came to a standstill during the three summer months. Based on average monthly deliveries of 50,000 tonnes, the total volume of sugar not sold abroad is about 150,000 tonnes.

How much is this in terms of money? According to the Office for Business and Export Development, the total exports of sugar and sweets for the first eight months of this year amounted to USD 340 million. Of these, sugar accounts for about USD 300 million. Thus, the volume of the lost third due to the export blockade is worth almost USD 100 million.

What's next

While sugar producers were facing a barrier, a ‘sugar movement’ began in neighbouring countries.

Romania, which has forgotten what sugar production is, in August reopened its first sugar factory in Luduș.

The good news is that the ban on sugar exports has been eased. Since August, the Ukrainian government has been providing quotas, but not giving exporters freedom of action.

"Under the quotas, 20,000 tonnes of sugar were exported to Romania," says Nazar Mykhailovyn from Ukrtsukor.

According to his forecasts, this year’s harvest will produce at least 1,700,000 tonnes of sugar.

"These volumes are enough to meet the needs of both domestic consumption and exceed exports. After all, the sugar deficit in the EU is still not over," he adds.