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Ukraine Sugar 2008
Prepared by:
Olena Pereyatenets, Agricultural Specialist
Executive Summary
In marketing year 2007/2008, sugar beet and sugar production decreased by 24% and 30% respectively, compared to the pervious year. This decrease followed the highest sugar beet crop (marketing year 2006/2007) recorded during the past 10 years. MY 2006/2007 sugar overproduction resulted in an excess supply in marketing year 2007/2008. Ukraine does not export sugar and was unable to consume all of the 2,850,000 tons of raw sugar produced that year. As a consequence, ending stocks were the highest level in the past 10 years. Large quantities remain unsold by farmers or sold unprofitably. This market condition resulted in farmers decreasing the sugar beet sown area by 23% in 2007/2008.
Production
In 2007/2008, the sown area for sugar beet crops decreased by almost 23% compared to 2006 levels despite the jump in sugar beet profitability recorded in 2006. Another reason for the decrease was higher profitability for oilseeds like sunflower and soybeans (please refer to the table below). In 2007/2008, the decrease in the spring sown area resulted in a 24% decrease in sugar beet production.
Ministry of Agriculture expects that sown area under sugar beet will decrease by 24% to 480,000 hectares in 2008. This decrease in the spring 2008 sown area will result in 15 million tons of sugar beet production, according to Ministry of Agriculture.
Grain Sunflower Seeds Sugar Beets
2000 64.8 52.2 6.1
2001 43.3 68.7 1.5
2002 19.3 77.9 -8.6
2003 45.8 64.3 6.2
2004 20.1 45.2 -0.8
2005 3.1 24.3 4.8
2006 7.4 20.7 11.1
2007 28.0 75.0 -10.0
Profitability of Main Agricultural Crops (% Change)
Data source: State Statistics Committee of Ukraine and National Sugar Association
In 2008, the sugar beet sown area will likely remain comparable to the 2007 level. Other factors that will contribute to the decrease in sugar beet sown area are: a high winter wheat sown area; a lower total spring sown area compared to 2007; very low profitability for marketing year 2007/2008; sugar beet and sugar overproduction in marketing year 2006/2007; significant stocks of sugar at the processing plants and farms (traditionally farmers are compensated with sugar as payment for sugar beets they delivered to the sugar processing plant).
The table below depicts the downward trend in the sugar beet sown area over the past decade. This decrease actually began in 1990 and the correlation between high sugar beet prices and the decrease in the sown area is high. The unfavorable winter crop area in 2005, the higher profitability of sugar beet production in 2005, and the significant increase in the sown area of the spring crop in 2006 resulted in the temporary increase in the sown area in marketing year 2006/2007. For 2007/2008 and 2008/2009, some of the area that was traditionally sown with sugar beets will now grow sunflower, soybeans, spring barley and corn (please refer to the graph, «Sown Areas for Major Crops»).
Sugar Beet Sown Area and Sugar Beet Prices
(Unit: 1,000 Hectares and UAH/tone)
Source: State Customs Committee of Ukraine
Sown Areas for Major Crops (Unit: 1,000 Hectares)
Source: State Customs Committee of Ukraine
Sugar Beets PSD Table
Ukraine
Sugar Beets
2006 Revised 2007 Estimate 2008 Forecast UOM
USDA
Official Post
Estimate Post
Estimate
New USDA
Official Post
Estimate Post
Estimate
New USDA
Official Post
Estimate Post
Estimate
New
Market Year Begin 09/2005 09/2005 09/2006 09/2006 09/2007 09/2007 MM/YYYY
Area Planted 674 674 674 825 825 825 680 680 635 (1000 HA)
Area Harvested 640 640 640 788 788 788 645 645 584 (1000 HA)
Production 15500 15500 15500 22420 22420 22420 14835 14835 17065 (1000 MT)
Total Supply 15500 15500 15500 22420 22420 22420 14835 14835 17065 (1000 MT)
Utilization for Sugar 15500 15500 15500 22420 22420 22420 14835 14835 17065 (1000 MT)
Utilizatn for Alcohol 0 0 0 0 0 0 0 0 0 (1000 MT)
Total Distribution 15500 15500 15500 22420 22420 22420 14835 14835 17065 (1000 MT)
Trade
No sugar beets were imported into Ukraine until May 2005 because of the prohibitively high import duty (50%, but not less than 125 Euro per 1 metric ton). The Ukrainian Parliament (Rada) reduced the import duty to 20% ad valorem in May 2005 opening the Ukrainian market for the first time in September 2005 to imports of sugar beets (HS Code 121291) for processing. Total imports of sugar beets from September through January 2005 reached 113,000 tons. Import volumes for October 2006 through September 2007 decreased to 35,805 tons.
Sugar Beet Imports (HS121291), Tons
Country Oct 05-Sep 06 Oct 06-Sep 07 Oct 07-Jan 08
Belarus 71,389 14,778 0
Poland 24,984 5,278 0
Lithuania 19,993 15,749 0
Total 116,366 35,805 0
Source: State Customs Committee of Ukraine
Sugar beet production increased by 36% in 2006 and was the highest recorded level since 1994. As a consequence, sugar beet imports decreased. The total volume of sugar beet imports from Belarus, Poland and Lithuania in 2007 was only 30% of the volume recorded a year earlier.
For marketing year 2008, the sugar beet sown area is likely to decrease to historically low levels. Sugar beet imports will be possible but will not be significant.
Beet Sugar Production
Production of beet sugar in marketing year 2007/2008 was revised down by 30% over marketing year 2006/2007 as a result of lower sugar beet production. As of February 2008, sugar processing plants had processed 95% of the sugar beet crop and produced 1,850,000 tons of sugar for marketing year 2007/2008. Final sugar production for marketing year 2007/2008 is estimated at 2,010,000 tons.
Source: State Customs Committee of Ukraine
06/07 and 07/08 — FAS-Kiev Estimation
Sugar PSD Table
Ukraine
Sugar, Centrifugal
2006 Revised 2007 Estimate 2008 Forecast UOM
USDA
Official Post
Estimate Post
Estimate
New USDA
Official Post
Estimate Post
Estimate
New USDA
Official Post
Estimate Post
Estimate
New
Market Year Begin 10/2005 10/2005 10/2006 10/2006 10/2007 10/2007 MM/YYYY
Beginning Stocks 178 144 178 125 91 125 785 751 785 (1000 MT)
Beet Sugar Production 2054 2054 2054 2850 2850 2850 1935 1935 2010 (1000 MT)
Cane Sugar Production 0 0 0 0 0 0 0 0 0 (1000 MT)
Total Sugar Production 2054 2054 2054 2850 2850 2850 1935 1935 2010 (1000 MT)
Raw Imports 39 39 39 10 10 8 260 260 260 (1000 MT)
Refined Imp. (Raw Val) 35 35 35 10 10 9 50 50 11 (1000 MT)
Total Imports 74 74 74 20 20 20 310 310 310 (1000 MT)
Total Supply 2306 2272 2306 2995 2961 2995 3030 2996 3105 (1000 MT)
Raw Exports 0 0 0 0 0 0 0 0 0 (1000 MT)
Refined Exp. (Raw Val) 31 31 31 10 10 10 20 20 10 (1000 MT)
Total Exports 31 31 31 10 10 10 20 20 10 (1000 MT)
Human Dom. Consumption 2150 2150 2150 2200 2200 2200 2250 2250 2300 (1000 MT)
Other Disappearance 0 0 0 0 0 0 0 0 0 (1000 MT)
Total Use 2150 2150 2150 2200 2200 2200 2250 2250 2300 (1000 MT)
Ending Stocks 125 91 125 785 751 785 760 726 795 (1000 MT)
Total Distribution 2306 2272 2306 2995 2961 2995 3030 2996 3105 (1000 MT)
Consumption
Consumption of sugar will likely continue to increase at a slow growth rate during marketing year 2007/2008 because of increased demand by the food processing sector. Ukrainians continue to consume sugar, primary refined sugar, and often use sugar for home canning. Historical data for sugar, consumption for substitutable products and consumption of sugar by households in Ukraine is provided in the Statistical Tables Section.
Trade
Imports
The import of raw cane sugar may increase in marketing year 2007/2008, especially if Ukraine accedes to the WTO. After WTO accession, the annual calendar year import quota for cane sugar will be set at 260,000 tons. This amount was approved on March 7, 2007 with the passage of Decree # 404. The expectation is that after Ukraine accedes to the WTO, 260,000 tons of cane sugar will be imported during marketing year 2007/2008 despite the high carry over that is forecasted. Importers prefer to import raw cane sugar to Ukraine because the profitability of cane sugar is much higher than for beet sugar.
Imports of Raw Cane Sugar (HS 170111), 1,000 Tons
Country Oct 03-Sep 04 Oct 04-Sep 05 Oct 05-Sep 06 Oct 06-Sep 07 Oct 07-Jan 08
Brazil 269 159 26 6,783 0
El Salvador 20 0 12 0 0
Guatemala 39 0 1 0 0
United States 22 0 0 0 0
Peru 14 0 0 0 0
Anguilla 10 0 0 0 0
Estonia 53 0 0 0 0
Germany 0 0 0 0 0
Belarus 21 0 0 0 0
Colombia 2 0 0 0 0
Cuba 45 0 0 0 0
Total 495 159 39 6,7 0
Source: State Customs Committee of Ukraine
Imports of Refined Sugar Raw (HS 170199), 1,000 Tons
Country Oct 03-Sep 04 Oct 04-Sep 05 Oct 05-Sep 06 Oct 06-Sep 07 Oct 07-Jan 08
Kazakhstan 6 14 33 3.8
Poland 14 12 1 0
Denmark 0 0 1 0.7 0.3
Lithuania 16 26 0 0
United States 0 9 0 0
Georgia 13 0 0 0
Estonia 2 0 0 0
Russia 10 0 0 0
Belarus 4.6 11
Total 62 61 35 9 11
Source: State Customs Committee of Ukraine
Exports
The forecast for sugar exports in marketing year 2007/2008 has increased compared to marketing year 2006/2007 estimates. The export estimate for marketing year 2006/2007 has been adjusted to coincide with Ukrainian State Customs Committee data.
Exports of Refined Sugar Raw (HS 170199), 1,000 Tons
Country Oct 03-Sep 04 Oct 04-Sep 05 Oct 05-Sep 06 Oct 06-Sep 07 Oct 07-Jan 08
Kazakhstan 10 0 14 1 0
Azerbaijan 56 0 10 0 0
Georgia 43 1 5 0.2 0
Moldova 107 36 1 0 0
Poland 0 10 1 0 0
Russia 3 0 0 0 0
Estonia 2 0 0 0 0
Virgin Islands 1 0 0 0 0
Afghanistan 4 4 0 0 0
Armenia 12 0 0 0 0
Uzbekistan 1 3 0 0 0
Slovakia 10 0 0 0 0
Tajikistan 1 0 0 0 0
Turkey 59 0 0 0 0
Kyrgyzstan 2 0 0 4.8 0
Total 311 55 31 6 0
Source: State Customs Committee of Ukraine and FAS-Kyiv
Stocks
Despite existing legislative provisions that are currently in place, the government has been unable to create an effective sugar intervention mechanism because of insufficient funds in the state budget that would be necessary to purchase government stocks.
Marketing year 2006/2007 stocks will be unusually high, a direct result of the high stocks recorded in 2005/2006, the measured increase in consumption and a very low level of exports. High stocks for marketing year 2006/2007 are expected to carry over, resulting in high stock levels for marketing year 2007/2008 as well.
Policy
GOU Established Minimum Prices for Sugar and Sugar Beets, Quotas «A» and «B»
Date of GOU decree MY Sugar beet price Sugar price Quota A* — domestic market Quota B** — international market
12/25/2001 2002/2003 UAH 165/ $33 UAH 2370/ $470 1800
12/25/2002 2003/2004 UAH 165/ $33 UAH 2370/ $470 1800
02/04/2004 2004/2005 UAH 165/ $33 UAH 2370/ $470 1800
12/21/2005 2005/2006 UAH 142/ $28 UAH 2370/ $470 1790
02/20/2006 2006/2007 UAH 163/ $32 UAH 2375/ $471 1840 185
03/07/2007 2007/2008 UAH 170/ $34 UAH 2500/ $495 2040
03/03/2008 2008/2009 UAH 141/ $28 UAH 2083/ $417 2040
*Quota «A» — the quota of sugar production earmarked for the domestic market by Ukrainian plants
**Quota «B» — the quota of sugar production earmarked for export to international markets
Source: The Cabinet of Ministers of Ukraine
On December 13, 2006, the President of Ukraine signed a law establishing an annual cane sugar import quota. The significance of this law is that for the first time a substantial amount of cane sugar will be able to enter the country without special government approval. The annual quota will be set at 260,000 tons. The law will be implemented upon Ukraine's accession to the WTO. The in-quota duty rate will be 2% of the costume's value and the out-of-quota duty rate will be assessed at 50% of the value.
Statistical Tables
Area Planted and Rate of Return for Investments in Grain, Sugar Beet and Sunflower Seed Production from 1990-2007, 1000 Hectares
1990 1994 1996 1998 2000 2001 2002 2003 2004 2005 2006 2007*
Grains and Pulses 14,583 13,526 13,247 13,717 13,646 15,585 15,447 12,494 15,433 15,004 14,515 15,114
Rate of Return for Grains, % Change 275,1 214,1 64,6 1,9 64,8 43,3 19,3 45,8 20,1 3,1 7,4 28
Sunflower Seed 1,636 1,784 2,107 2,531 2,943 2,502 2,834 4,001 3,521 3,743 3,964 3,604
Rate of return for Sunseed, % Change 236,5 224,1 53,0 22,0 52,2 68,7 77,9 64,3 45,2 24,3 20,7 75
Sugar Beets 1,607 1,485 1,359 1,017 856 970 897 773 733 652 815 610
Rate of Return for Sugar Beets, % Change 29,5 66,0 3,8 -12,0 6,1 1,5 -8,6 6,2 -0,8 4,8 11,1 -10
Data source: State Statistics Committee of Ukraine.
*-preliminary estimate from State Statistics Committee of Ukraine
Imports of Sugar into Ukraine (HS1701)
(1,000 Tons)
Country Oct 03-Sep 04 Oct 04-Sep 05 Oct 05-Sep 06 Oct 06-Sep 07 Oct 07-Jan 08
Kazakhstan 5 13 30 4 0
Brazil 269 159 26 7 1
El Salvador 20 0 12 0 0
Guatemala 39 0 1 0 0
Poland 13 11 1 0 0
Denmark 0 0 1 1 0
Lithuania 15 24 0 0 0
United States 22 8 0 0 0
Estonia 55 0 0 0 0
Peru 14 0 0 0 0
Russia 16 0 0 0 0
Anguilla 10 0 0 0 0
Georgia 12 0 0 0 0
Belarus 21 0 0 5 10
Colombia 2 0 0 0 0
Cuba 45 0 0 0 0
Total 559 215 71 16 11
Imports of All Sugar by HS Category into Ukraine*
MY 04/05 Refined Sugar (HS 170199) Raw Cane Sugar (HS 170111) MY 05/06 Refined Sugar (HS 170199) Raw Cane Sugar (HS 170111) MY 06/07 Refined Sugar (HS
170199) Raw Cane Sugar (HS 170111) MY 07/08 Refined Sugar (HS Code 170199) Raw Cane Sugar (HS 170111)
Oct-04 1,021 10,935 Oct-05 1,449 17,000 Oct-06 381 — Oct-07 0.631 —
Nov-04 13,214 10,110 Nov-05 660 7,805 Nov-06 71 — Nov-07 1.486 —
Dec-04 5,049 0 Dec-05 4,656 13,742 Dec-06 1,890 737 Dec-07 3,079 —
Jan-05 7,043 0 Jan-06 6,418 3 Jan-07 15 1,920 Jan-08 5.420 0.632
Feb-05 4,023 1 Feb-06 774 0 Feb-07 0.103 0.538 Feb-08 3,087 0.632
Mar-05 2,246 0 Mar-06 380 0 Mar-07 0.076 0.592 Mar-08
Apr-05 308 10,611 Apr-06 5,488 8,000 Apr-07 0.891 1.361 Apr-08
May-05 10,398 0 May-06 1,633 0 May-07 0.781 — May-08
Jun-05 737 0 Jun-06 6,476 4,500 Jun-07 0.853 — Jun-08
Jul-05 2,126 0 Jul-06 784 7,680 Jul-07 1.745 — Jul-08
Aug-05 7,497 125,917 Aug-06 2,311 0 Aug-07 1.147 — Aug-08
Sep-05 2,688 1,080 Sep-06 992 0 Sep-07 1.230 — Sep-08
Total 56,350 158,654 Total 32,021 58,730 Total 10,000 9,208 Total 6,173 1.264
Data Source: State Statistics Committee of Ukraine (*As is basis)
Sugar Exports From Ukraine (HS 1701)
(1,000 Tons)
Country Oct 03-Sep 04 Oct 04-Sep 05 Oct 05-Sep 06 Oct 06-Sep 07 Oct 07-Jan 08
Kazakhstan 9 0 13 1 0.01
Azerbaijan 52 0 9 0.01
Georgia 40 1 5 0.2
Moldova 99 33 1 0.01 0.01
Poland 0 9 0 0
Russia 3 0 0 0
Estonia 2 0 0 0
Virgin Islands 1 0 0 0
Afghanistan 3 4 0 0
Armenia 11 0 0 0
Uzbekistan 1 3 0 0
Slovakia 9 0 0 0
Tajikistan 1 0 0 0
Turkey 54 0 0 0
Kyrgyzstan 2 0 0 4.8
Total 286 50 28 6.02 0.02
Data Source: State Statistics Committee of Ukraine
Monthly Sugar Exports from Ukraine *
(Tons)
MY 03/04 HS 1701 MY 04/05 HS 1701 MY 05/06 HS 1701 MY 06/07 HS 1701 MY 07/08 HS 1701
Oct-03 46 Oct-04 0 Oct-05 1 Oct-06 0 Oct-07 1
Nov-03 33 Nov-04 11 Nov-05 2 Nov-06 1 Nov-07 15
Dec-03 65 Dec-04 5 Dec-05 2 Dec-06 0 Dec-07 4
Jan-04 12 Jan-05 0 Jan-06 2 Jan-07 0 Jan-08 63
Feb-04 5 Feb-05 4 Feb-06 7 Feb-07 1.233 Feb-08
Mar-04 39 Mar-05 6 Mar-06 6 Mar-07 667 Mar-08
Apr-04 25 Apr-05 2 Apr-06 1 Apr-07 165 Apr-08
May-04 19 May-05 4 May-06 1 May-07 40 May-08
Jun-04 14 Jun-05 3 Jun-06 0 Jun-07 8 Jun-08
Jul-04 12 Jul-05 2 Jul-06 2 Jul-07 16 Jul-08
Aug-04 15 Aug-05 7 Aug-06 0 Aug-07 63 Aug-08
Sep-04 1 Sep-05 6 Sep-06 2 Sep-07 2 Sep-08
Total 286 Total 50 Total 28 Total 963 Total 83
Data Source: State Statistics Committee of Ukraine (HS 1701) (*As is basis)
Date: 03.04.2008
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