EXCLUSIVE-Ukraine sugar output, exportable surplus seen rising in 2024 - Union

Credit: REUTERS/Gleb Garanich

By Pavel Polityuk

KYIV, Nov 20 (Reuters) - Ukraine's sugar industry, one of the country's few profitable farm sectors, may continue to expand the planted area in 2024 and with good weather the 2024/25 exportable surplus could jump by around 50%, the producers' union Ukrsugar said.

Ukraine produced 5 million metric tons of beet sugar during the Soviet era, but has since reduced production to just over a million tons due to export problems and competition with sugar made from cane.

However, the temporary suspension of European import tariffs for Ukrainian agricultural products from June 2022, combined with the decreasing profitability of grain and oilseed, previously key for Ukraine, led to a jump in the area sown to beet and the beet harvest.

A U.N.-brokered deal that guaranteed safe grain exports via the Black Sea expired in July after Russia pulled out and Moscow's de facto blockade of Ukraine's ports has sharply increased the logistics costs of grain exports, making cultivation unprofitable.

Limited export opportunities through the ports and the western border make exports of significantly more expensive sugar more profitable than grain. The shortage of sugar in Europe is an additional incentive.

Farmers increased the sugar beet sowing area to 250,000 hectares in 2023 from 186,000 hectares in 2022, Nazar Mykhailovyn, the chairman of Ukraine's sugar producers' union, told Reuters.

He said the sowing area in 2024 would depend on the development of the war with Russia and the export situation, as the industry is export-oriented and any difficulties with shipments will immediately lead to a reduction in sowing.

"There is information that the area (sown to beet in 2024) will be within the limits of the current year, but... there may be an increase to 300,000 hectares," Mykhailovyn said.

He said the 2023 harvest is estimated at 12 million tons of beet and may jump to 17 to 18 million tons in 2024, which will allow the production of around 2 million tons of white beet sugar.

With domestic consumption of up to 950,000 tons per season, the exportable surplus could reach half of the expected 2 million-ton output.

Ukrsugar expects that 2023/24 sugar production will reach 1.75 million tons and 650,000 tons of the volume could be exported, mostly to Europe.

Ukraine has already exported about 150,000 tons of sugar so far the current season, Mykhailovyn said.

Ukraine exported 450,000 tons of beet sugar in 2022/23 and the majority went to Europe. Romania, Bulgaria, Poland, France and Italy were the main destinations, Mykhailovyn said.

"Almost all went to Europe. Since our sea routes are blocked, we cannot ship to Asia," he added.

In the 2021/22 season, when the European market was restricted due to tariffs, Ukraine exported about 55,000 tonnes of sugar.

(Reporting by Pavel Polityuk; Editing by Sharon Singleton)

((pavel.polityuk@tr.com; +380 44 2449150; Reuters Messaging: pavel.polityuk.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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