Ukraine to reverse beet slump as sugar price bites

Ukraine is to attempt to reverse a long-running fall in sugar beet production which has turned the country into a sugar importer at a time of soaring prices. Kiev is to encourage farmers to raise beet plantings by 37% in 2010, to help boost domestic sugar output by some 80% to 2.5m tonnes, deputy farm minister Ivan Demchak said, according to the Kommersant newspaper.

The initiative comes in the face of a surge in imports of raw cane sugar to an estimated 543,000 tonnes in 2009-10 from about 100,000 tonnes a year before, while prices on Monday hit a fresh 28-year high in London.

The price rises have struck Ukraine at a time of weakness in its currency, the hryvnia, thanks to a severe economic crisis which has forced Kiev to ask the International Monetary Fund for help.

'Production destroyed'

Mr Demchak's comments also follow criticism from Ukraine's president, Viktor Yuschenko, over the country's decline from an exporter of about 5m tonnes of sugar a year in Soviet times.

"Sugar production is in fact being destroyed," Mr Yuschenko told a farmers' meeting in Kiev last month, also noting a decline in the number of domestic refineries.

"Should it be like this, when there's a sugar price boom in the world?"

Mr Demchak said the government's task was "to create conditions to boost the sugar beet sowing area to 450,000 hectares in 2010", although details of how this would be achieved were not clear.

Crop competition

Ukraine's decline from sugar powerhouse to importer has been fostered by high grain prices, which have prompted farmers to switch to cereals and oilseeds, such as sunflowers - it is the world's biggest exporter of sunflower oil - and rapeseed.

Beet plantings, which once reached 1.6m hectares, have been falling for three decades.

This year's beet crop was likely to hit 10.3m tonnes, with sugar output estimated at 1.37m tonnes, Mr Demchak said.

Ukraine consumes around 2m tonnes of sugar, raw value, a year.

UkrAgroConsult