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ASTARTA Started Raw Sugar Processing

ASTARTA started production of sugar from raw cane sugar. 

The processing volumes contracted by the Company for the next three months of the 2021 calendar year amount to 60 kt. Yareskivsky Sugar Plant will process raw sugar.

Victor Ivanchyk, Founder and CEO, agri-industrial holding ASTARTA-KYIV:

“ASTARTA's business philosophy is based on the Company's active presence in the market and steady sale of sugar throughout the year. The focus is on our consumers and buyers. And the Company's task is to ensure sustainable cooperation and supply of products when they need them.

This year, the sugar market is experiencing high volatility, caused by rising global prices for all raw materials, including sugar, as well as the uncertainty for the market participants whether supplies will be sufficient until the new harvest.

As a socially responsible company, we decided to create a reserve stock of sugar in the interest of our consumers, ensure food security and stabilize product prices in Ukraine amid projected price growth globally in the medium term.

Such a step will also help the Company to prevent the situation faced in September last year. There was a temporary shortage of sugar as stocks ran out as the new sugar beet processing season began one month later than usual due to adverse weather conditions. The yield of sugar beets in 2020 was the lowest in recent years (42.5 t/ha). The same can be said about the sugar content (16.14%). All these factors contributed to the rise of prices which led to the Antimonopoly Committee of Ukraine launching an investigation of the situation. 

We believe that in the next marketing year, which begins on September 1, further import of raw sugar is impractical. After all, Ukrainian producers and existing production facilities can fully supply the domestic market with their high-quality sugar made from sugar beets grown in Ukrainian fields."

The available data and calculations by independent market analysts give us reason to hope that the amount of sugar available in Ukraine will be fully sufficient for the domestic market and meet consumer demand until the beginning of the next season of sugar beet processing. Current harvest data for the 2021 season is optimistic. Therefore, it would be sufficient to import and process no more than 100-120kt of raw sugar, only for the purpose of creating stocks, as an insurance against potential adverse weather conditions.

Such conclusions are confirmed by specialists of the scientific and practical centre of sugar beet production of Ukraine, who lay out three scenarios for the sugar industry in Ukraine in the 2021/22 marketing year.

 

 

Scenarios

Indexes    

 

Optimistic    

  Basic 

 Pessimistic   

Sowing area, kha 

 

230.0

Predicted sugar balance

 

2020/21 MY, kt    

2021/22 MY,  kt

Balances at the beginning of the period1

255       

 65 

 65 

65

Sugar production

1170

1530

1460

1410

Consumption Fund (domestic market)

1380      

1380

 1380  

 1380

Export

80       

 80 

 60

 30

Import

100

 

 

 

Balances at the end of the period

65           

135

85 

65

1 All sugar in Ukraine, including warehouses of sugar factories, trade networks,households, etc.

In this situation, import and processing of raw cane sugar in limited quantities, as a precautionary measure, is preferred to imports of white sugar at a zero import duty, for which there are no objective prerequisites. Instead, the rapid growth of imports can lead to underutilisation of production capacities and job loss in the sugar beet and processing sectors, reducing tax receipts to the state budget. 

Today, the main problem of the sugar industry is not lack of production capacity, but lack of raw materials for processing and full loading of operating plants. In previous years in Ukraine, overproduction of sugar and high stocks led to sugar prices declining below the cost of production, and the industry went through difficult times. Sugar beet growers and sugar producers have suffered losses for several years in a row and, as a result, the acreage under sugar beet was reduced to 216k ha, a historic low. Therefore, today the Ukrainian government should focus on creating conditions that would encourage farmers to increase the area under sugar beets.
 

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Alla Yurchuk

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