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During the first nine months of the 2025/26 marketing year (September–May), Ukraine exported 504 thousand tonnes of sugar. This is quite a solid result, considering analysts had forecast total exports for the season at around 505 thousand tonnes. It is already evident that this forecast has effectively been reached, while the industry still has three months remaining before the end of the marketing year to surpass expectations.
At the same time, Ukraine is entering the new season with a record-low area planted to sugar beet. AgroPortal.ua spoke with Yana Kavushevska, Chairwoman of the National Association of Sugar Producers of Ukraine (“Ukrsugar”), about the reasons behind the declining interest in the crop and other challenges facing the sugar industry.
Price, weather, or war? What has had the greatest impact on the reduction of sugar beet acreage in Ukraine?
Yana Kavushevska: A combination of factors has contributed to the record-low sugar beet planting area this year. Among the key reasons is, first and foremost, the low sugar price. A downward price trend has been observed both in Ukraine and globally for the past two years. However, in Ukraine the price has long fallen below the level that ensures the economic viability of production.
For comparison, while the wholesale sugar price in May 2023 was around UAH 29/kg and UAH 26/kg in May 2025, this May it barely reached UAH 22/kg. In fact, this is roughly the same level as in 2022. At the same time, as you understand, production costs have increased significantly over the past four years, including fuel, fertilizers, crop protection products, energy, and labor.
Meanwhile, other crops competing with sugar beet in crop rotations are demonstrating higher profitability. As a result, farmers are shifting their focus toward those alternatives.
Why are farmers generally moving away from sugar beet cultivation?
Yana Kavushevska: Sugar beet is known to be one of the most complex and capital-intensive crops in arable farming. It requires substantial investment per hectare, which is only recovered at least a year later. Soil preparation begins in autumn, while revenue is generated only after the beets are processed into sugar the following autumn.
In addition, during wartime, farmers face extra risks, including the possibility of crop damage or destruction due to shelling. Therefore, many farms prefer less capital-intensive crops with shorter production cycles, such as sunflower, which enjoys stable demand and broad market opportunities.
At the same time, sugar beet remains an important crop for crop rotation and production diversification, especially under wartime conditions. This is precisely why, following the opening of the European market in 2023–2024, farmers significantly expanded planting areas, and sugar production in Ukraine nearly doubled domestic consumption.
However, market conditions later changed, as the global market entered a period of surplus supply. High beet yields and overproduction in the European Union prompted the reintroduction of quotas on Ukrainian sugar imports. Consequently, Ukrainian exports to the EU declined substantially. At the same time, exports to the global market (which are typically shipped through ports) remain constrained by logistical limitations and risks, which, combined with low prices, raise questions about their economic feasibility.
As a result, sugar beet acreage has contracted significantly. Nevertheless, from what I can observe, most experienced agricultural producers have not abandoned the crop entirely; rather, they have reduced planted areas while maintaining sugar beet within their crop rotations.
Which regions of Ukraine today virtually no longer grow sugar beet, and why?
Yana Kavushevska: There are regions in Ukraine where sugar beet has not been cultivated for many years due to the absence of sugar factories. These include, for example, Dnipropetrovsk and Mykolaiv regions.
In Sumy region, sugar beet cultivation has been preserved but only on a very limited scale, with the harvested crops mainly transported to neighboring regions for processing. There is currently no sugar beet cultivation in Kharkiv region, despite the presence of sugar factories there. Unfortunately, since the beginning of the full-scale invasion, these facilities have not been engaged in production activities.
Were there any issues with seed supply this year?
Yana Kavushevska: Leading seed companies such as KWS and Betaseed are associate members of Ukrsugar and supply the Ukrainian market with modern, high-performance hybrids. I have not heard from them about any significant supply problems this year. Therefore, I do not believe seed availability was a factor behind the reduction in planted area.
What are your forecasts for sugar production this season?
Yana Kavushevska: According to our association’s estimates, which differ somewhat from the official figures of the Ministry of Economy, approximately 162,000 hectares were planted with sugar beet this year. Based on this acreage, our initial forecast for sugar production is around 1.2 million tonnes.
However, throughout April the crop was negatively affected by several waves of frost, followed by dust storms in May. In certain regions, the damage was quite significant, and we are currently assessing the scale of the losses. Even at this stage, it is clear that weather conditions have reduced the likelihood of repeating last year’s record yields. Therefore, we cannot rule out a downward revision of our production forecast.
As for the domestic market, sugar consumption in Ukraine declined to approximately 900,000 tonnes per year following the outbreak of the full-scale war. Today, we are observing a further decrease, to around 800,000 tonnes annually.
Nevertheless, even under a conservative production scenario, the Ukrainian market will be fully supplied with sugar. Moreover, the industry’s export potential will remain intact.
The key issue today is not so much ensuring domestic supply, but rather creating the economic conditions necessary for Ukrainian producers to maintain production in the medium and long term.
What is the current situation with sugar beet plantings in Europe?
Yana Kavushevska: Sugar beet acreage in Europe is also declining for the second consecutive year as a response to falling sugar prices. Final figures have not yet been published; however, preliminary estimates indicate that the total sugar beet area in the EU will decrease by approximately 9% compared to last year.
At the same time, unfavorable weather conditions are raising concerns about the upcoming harvest. According to GlobalData, precipitation levels in EU sugar beet-growing regions are currently 28% below average. The most severe moisture deficits have been recorded in Belgium (-93%), the Netherlands (-77%), and the United Kingdom (-80%). France is the notable exception, with rainfall levels 18% above average.
In addition, European producers are becoming increasingly concerned about the rapid spread of aphids, which are vectors of Beet Yellows Virus (BYV). In 2020, a similar outbreak in the United Kingdom resulted in the loss of approximately one-quarter of the country’s sugar beet crop. It is still too early to determine whether such a scenario will repeat this year; however, risks to both sugar beet yields and sugar production in Europe remain elevated.
The decline in sugar prices in the EU has led to reduced processing volumes, and producers are cutting sugar beet acreage. How could this affect Ukraine, particularly its sugar exports?
Yana Kavushevska: As in Ukraine, Europe harvested an excellent sugar beet crop last year, enabling European producers to manufacture sufficient sugar to meet domestic demand. In addition, the EU maintains a number of trade arrangements that allow sugar imports from third countries.
Alongside the quota for Ukrainian sugar, the EU provides tariff-rate quotas (TRQs) for sugar imports from the Balkans, Central America, Vietnam, and other regions. There is also a sugar import quota under the Mercosur framework.
Furthermore, the EU operates the Inward Processing Relief (IPR) regime, which allows sugar to be imported from third countries outside existing tariff-rate quotas without the payment of customs duties or VAT, provided that the sugar is further processed within the EU and subsequently re-exported as value-added products such as confectionery, chocolate, beverages, and other food products.
While European stakeholders were focused on Ukrainian sugar, believing that imports from Ukraine were destabilizing the EU market, the reality was that sugar imports entering the EU under the IPR mechanism were substantially larger than Ukrainian volumes.
For example, during the 2024/25 marketing year, the EU imported 622 thousand tonnes of sugar from various countries under tariff-rate quotas, while imports under the IPR regime reached 742 thousand tonnes over the same period. During the first six months of the 2025/26 marketing year, sugar imports totaled 410 thousand tonnes under quotas and 478 thousand tonnes under the IPR regime.
Under pressure from European sugar producers and beet growers, the European Commission announced the temporary suspension (postponement) of the IPR regime for raw cane sugar effective from 1 May 2026.
Without doubt, this represents a significant victory for European producers. Combined with lower production resulting from reduced planting areas, the measure provides grounds for expecting greater stability in the European sugar market. At present, however, the EU continues to import sugar under tariff-rate quotas (TRQs) as well as white sugar under the IPR regime, which is not affected by the restriction.
What is next for Ukraine’s sugar quota, and when will it be reviewed?
Yana Kavushevska: The EU–Ukraine Association Agreement provides for a review of tariff-rate quotas every five years, meaning the review was originally scheduled for 2022. However, due to the full-scale war and the introduction of the Autonomous Trade Measures (ATM) regime, the timeline has shifted, and the quota review is now expected to take place from 1 January 2028.
At the same time, if Ukraine’s integration into the European Union accelerates, as is currently being discussed, there may be an opportunity to return to a free-trade regime for sugar altogether.
For now, Ukraine has an annual quota of 100,000 tonnes of sugar exports to the EU. This volume is allocated among producers in proportion to their share of production during the previous season. The purpose of this mechanism is to ensure that exports remain balanced and do not create market disruptions by allowing 100,000 tonnes of sugar to enter the EU customs territory at once.
Under this system, each producer knows the volume allocated to them and can be confident that they will be able to export their share. As a result, there is no incentive to rush shipments. On the other hand, European food manufacturers that use sugar as a raw material typically do not purchase their annual requirements in a single transaction; instead, they buy on a monthly or quarterly basis.
Thanks to the quota allocation mechanism, Ukrainian producers have gained the opportunity to sign direct contracts with manufacturing customers in Europe and gradually supply them with the required sugar volumes. This has enabled Ukraine to become more deeply integrated into European supply chains, which we consider a significant achievement.
Taking all these factors into account, there is reason to believe that Ukrainian sugar will not be surplus to Europe’s needs and that the quota will be fully utilized.
Is Ukraine opening up new export markets for sugar?
Yana Kavushevska: Today, the Middle East is the main destination for Ukrainian sugar exports, accounting for 50% of total exports during the first nine months of the 2025/26 marketing year. The European Union represented 18% of exports, while non-EU Balkan countries accounted for 11%.
In recent months, exports to Central Asian countries, particularly Uzbekistan, have been growing rapidly. These markets have already surpassed the Balkans, accounting for 14% of total exports.
However, it would not be entirely accurate to describe Uzbekistan as a new market for Ukrainian sugar. Until around 2019, it was one of our key export destinations. Over the past seven years, however, high logistics costs made exports to Uzbekistan economically unviable.
As a result, the Uzbek market gradually became supplied by sugar from Russia and refineries in the United Arab Emirates. However, disruptions caused by the situation in and around the Strait of Hormuz have created difficulties in supplying sugar from that region, allowing Ukrainian sugar to fill part of the resulting supply gap in the Uzbekistan market. It is difficult to say how long this opportunity will last. Nevertheless, at present it represents a promising outlet for Ukrainian sugar exporters.
What are the most pressing challenges facing the sugar industry today?
Yana Kavushevska: The Ukrainian sugar industry is currently facing a number of serious challenges, and its future development largely depends on how successfully they are addressed.
In addition to the prolonged period of low sugar prices, which no longer provide sufficient economic incentives for production, one of the most acute issues is workforce availability. Sugar production is a complex, high-tech process that requires highly specialized professionals with many years of practical experience. At the same time, Ukraine currently lacks an effective system for training such specialists, and replacing them quickly on the labor market, including through immigration, is not a realistic option.
Another distinctive feature of the sugar industry is the seasonal nature of factory operations. The processing campaign lasts only three to four months each year, while during the off-season employees are engaged in maintenance, equipment modernization, and preparation of facilities for the next production cycle. Some workers are also employed by other enterprises within the agricultural sector.
Recent amendments to the regulations governing the reservation of personnel from military mobilization have created a risk of losing part of the industry’s key workforce. Given the difficult economic conditions, sugar companies have already optimized staffing levels to the maximum extent possible. As a result, even the loss of a relatively small number of specialized employees could jeopardize the upcoming beet processing campaign.
A second critical issue is securing adequate natural gas supplies for sugar factories during the processing season. In Ukraine, public attention is often focused on potential electricity shortages; however, for most sugar plants, natural gas is the truly critical resource. Electricity is mainly required during start-up, after which factories are largely self-sufficient in power generation and operate in so-called island mode. Without a stable supply of natural gas, however, most sugar factories would be unable to maintain production.
Companies are already contracting the required volumes of gas, but any disruption in the physical availability of gas within the transmission system during the processing season could put sugar production at risk.
On both issues, we are counting on constructive dialogue with the relevant ministries — Economy, Defence, and Energy — as well as other government authorities. This is not simply a matter of supporting a single agri-food sector. Sugar is a socially significant product, and over the past three marketing years the Ukrainian sugar industry has generated approximately USD 1 billion in export revenues for the country.
Moreover, Ukrainian sugar is already strengthening the country’s economic presence in strategically important markets such as the Middle East and, in the future, could play an important role in supporting the food security of the European Union. Therefore, it is essential to create conditions that will allow the industry not only to preserve its production capacity but also to continue expanding its potential.
What sugar prices should consumers expect going forward?
Yana Kavushevska: As we discussed earlier, current market conditions have pushed sugar prices below an economically sustainable level. At the same time, the costs of sugar beet cultivation and sugar production have increased significantly in recent years.
We hope to see prices recover to a fair level that will allow producers not only to cover their costs but also to invest in the next production cycle. For the industry, a fair price means covering production costs while providing a minimum level of profitability necessary for sustainable development.
If current price levels persist for an extended period, Ukraine risks losing a significant share of its sugar production capacity. This would no longer be merely an issue for individual businesses; it would become a matter of national food security and export competitiveness.
To put the situation into perspective, a bottle of mineral water today costs more than one kilogram of sugar, despite the fact that the production costs and complexity of manufacturing these two products are hardly comparable.