Sugar avalanche threatens to bury Ukrainian suppliers
Ukraine may well become swamped with sugar, if the current record amounts of this white gold are any indication. According to Mykola Yarchuk, the head of the Ukrtsukor National Sugar Producers Association, 102 sugar refineries that began operating at the beginning of the season have supplied up to 505,000 tons of sugar. Add to this the thousands of tons of sugar that were imported during the last crisis and what was left over from the old reserves, and the total figure is considerable: 820,000 tons. Paradoxical as it may seem, sugar producers aren’t happy. But this is understandable. This country consumes some 150,000 tons of sugar a month, and forecasts for this year’s sugar beet yield promise an output of 1.81 million tons. It is anyone’s guess where all this sugar will go and what prices will be charged for it. Most likely we are in for another price collapse.
The head of the sugar producers’ association believes that this one will be caused by the seasonal sugar price increment and by the increase in contraband sugar from the Russian Federation, which reaches nearly 15,000 tons every day, whereas its cost value ranges between 3,000 and 3,500 hryvnias a ton. Of course, almost no one is selling this sugar, because of anticipated higher prices. Experts are convinced that this price increase is a necessity; otherwise the industry will be destroyed. Yarchuk also believes that wholesale/retail sugar prices should not be lower than 3,150-3,500 hryvnias per ton. Otherwise, “if we don’t take any measures, middlemen will purchase the sugar and we’ll have to buy sugar at 5 hryvnias per kilo next year.”
Sugar producers are also asking the state for a favor unprecedented in market economy conditions: they want the state to take them under its wing. With so many markets struggling to get the state to finally leave them in peace, our sugar producers are campaigning for the reinstatement of state regulation in the industry. According to the head of Ukrtsukor, the current situation on the domestic market is uncontrollable and unsystematic because of the very lack of a state agency that would manage this branch and the failure of legislated measures aimed at regulating the market. The law on state regulation of the sugar market is practically ineffective.
However, current practice leaves one with slim hopes concerning the effectiveness of state regulation. Today such state structures as the State Committee on the Material Reserve and the Agrarian Fund, which were instructed to purchase sugar in order to prevent a price collapse, have not made these purchases. Cane sugar sales are underway, despite the cabinet’s directive in early September to suspend such sales. “We further request that the Office of the Prosecutor General focus attention on a decision made by the previous government, allowing Georgia to export raw sugar to Ukraine, even though this country does not have a single sugar refinery,” says the head of Ukrtsukor. Earlier, the association asked the Ukrainian president, prime minister, and parliamentary speaker to regulate the situation in the sugar industry. It seems that people with their own interests in the sugar business were working in the former government, and these interests were somewhat different from national ones.
Be that as it may, this crisis may affect not only sugar producers but sugar beet enterprises. Mykola Tarasiuk, deputy president of the All-Ukrainian Union of Agricultural Producers (Vinnytsia oblast), declared recently that practically 40 percent of land scheduled for sugar beets remain unplowed. According to him, someone somewhere is trying to boost sugar prices at the expense of the countryside.
