Restrictions on sugar export to the EU may lead to closure of Ukrainian sugar factories

The introduction of restrictions on sugar export to the European Union will have a negative impact on the sugar industry of Ukraine in general and may lead to the closure of a number of sugar factories, said Acting Chairman of the Board of the National Association of Sugar Producers of Ukraine «Ukrtsugar» Nazar Mykhailovyn in a comment to «Interfax-Ukraine».

«This will have a very detrimental effect on Ukrainian sugar producers, as we have an export-oriented sugar industry. We hoped to be able to export sugar, thereby preserving and developing our industry. Restrictions, licensing and bans will lead to overproduction in the current season and factories closure», — he said.

According to the head of «Ukrtsugar», in 2023-2024 production year, Ukrainian sugar factories produced 1.8 million tonnes of sugar, for the country's domestic needs of 900,000 tonnes. Accordingly, Ukraine could supply 900,000 tonnes of sugar to foreign markets.

«Actually, the main consumers of Ukrainian sugar in the European Union were food industry enterprises — processors that use sugar in their production. They are interested in Ukrainian sugar because it is of high quality, meets EU standards and to some extent is cheaper than in most countries of the European Union», — Nazar Mykhailovyn explained.

In the event that the European Union introduces quotas and any other restrictions, Ukrainian sugar producers will have to think about entering the world markets, in particular, countries of Asia and Africa and other states that are not part of the EU, the head of the sugar association claims and adds that Ukrainian sugar producers will need access to the sea routes.

In addition, he reminded that Ukraine not only has experience, but also exports sugar to Asia, Africa, in particular, Cameroon.

«Here, the issue of the cost of logistics is more important. Due to the blockade of Polish and Hungarian checkpoints, our logistics have become more expensive by almost two and a half times. After all, it is necessary to take into account the delivery of sugar to the nearest port, and then transportation by sea for delivery to these countries», — said Nazar Mykhailovyn.

Commenting on Poland's proposal to use data for the years 2021-2023 when calculating the allowable quota for the supply of Ukrainian sugar to the European Union, he stated that such a proposal would significantly affect the possible volumes of supplies. He emphasized that from June 5, 2022, the agreement with the EU on the duty-free export of sugar came into force. Until this period, Ukraine could supply the EU with no more than 20,000 tonnes of sugar per year. In addition, since the beginning of the war, Ukraine received the right to export only in June, accordingly, there were practically no deliveries for six months.

The association noted that in 2022 sugar exports amounted to about 150,000 tonnes, and in 2023 it reached 550,000 tonnes.

«Of course, it would be better for us to export without any quotas. However, if we choose between the proposals of the European associations of sugar producers and the quota proposed by the European Commission, then the figure announced by the EC is more acceptable for us», — Nazar Mykhailovyn summarized.

As reported, on January 31, the European Commission published a draft resolution extending autonomous trade measures on imports from Ukraine for another year, i.e. from June 6, 2024 to June 5, 2025. These measures were introduced for the first time in June 2022. They provide for the unilateral suspension of EU customs duties on the import of goods from Ukraine.

At the same time, the possibility of introducing regional measures regarding the import of Ukrainian agricultural products is foreseen for "front-line" countries. They will apply when imports cause market disturbances in one EU Member State or region. The Ministry of Agriculture of Poland proposed to the European Commission, when calculating the quota for the supply of poultry meat, eggs and sugar from Ukraine, to use as a base period not the data for 2022-2023, but the average indicators for 2021-2023.