Ukraine: Sugar Production Not So Sweet
8 April 2008 In 2007/08, Ukrainian production of sugarbeets and sugar decreased by 24% and 30%, respectively, following an historically high 2006/07 campaign, according to the US Dept. of Agriculture’s Foreign Agriculture Service (USDA-FAS).
The 2006/07 sugarbeet and sugar season, which posted a 10-year production high, resulted in an excess supply in 2007/2008. Ukraine does not export sugar, and was unable to consume all of the 2.85 million tons of raw sugar produced that year. Consequently, ending stocks were the highest level they had been in a decade. Large quantities still remain unsold by farmers, or sold unprofitably. This led to farmers decreasing the sugarbeet area by 23% in 2007/08.
Production
In 2007/08, the sown area for sugarbeets decreased by almost 23% compared to 2006 despite the jump in sugarbeet profitability that year. Another reason for the decrease was higher profitability for competitive crops such as sunflowers and soybeans. In 2007/08, the decrease in the spring sown area resulted in a 24% decrease in sugarbeet production.
The Ministry of Agriculture expects that the sown area under sugarbeets will decrease by 24% to 480,000 hectares (Ha) in 2008. This decrease in the spring 2008 sown area will result in 15 million tons of sugarbeet production, according to Ukraine’s Ministry of Agriculture.
In 2008, the sugarbeet sown area will likely remain comparable to the 2007 level. Other factors that will contribute to the decrease in area are a high winter wheat sown area; a lower total spring sown area compared to 2007; very low profitability for 2007/08; sugarbeet and sugar overproduction in 2006/2007; and significant stocks of sugar at the processing plants and farms – traditionally farmers are compensated with sugar as payment for sugarbeets they deliver to the sugar processing plant.
The sugar beet sown area has decreased over the past decade, beginning in 1990. The correlation between high sugarbeet prices and the decrease in the sown area is high. The unfavorable winter crop area in 2005, the higher profitability of sugarbeet 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 2006/07. For 2007/08 and 2008/09, some of the area that was traditionally sown with sugarbeets will now grow sunflowers, soybeans, spring barley, and corn.
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