How the Russian sugar industry is developing international markets. World sugar market Britain joins the EEC and seeks sugar benefits for the former colonies

The 2016–2017 season for the production of beet sugar became a record for Russia: 6.15 million tons of sugar were produced. Such volumes are significantly higher than the demand on the domestic market, and the sugar industry for the first time in its three-century history faced the problem of overproduction of beet sugar. Only decision this problem - entering the international market.


Record time

Over the past 20 years, the productivity of sugar production in Russia has grown significantly. Compared to sugar production in 1997, current production volumes have quadrupled, and the sugar industry achieved its greatest performance ever in the 2016–2017 season. Then, a record amount of sugar was produced in the country - 6.15 million tons, for the first time not only fully providing the domestic market, but also exceeding domestic consumption according to various estimates by 300-500 thousand tons. In 2016, the gross harvest of sugar beet increased to 51.2 million tons, the quality of raw materials also improved. According to data published by the Institute for Agricultural Market Studies, the 2017–2018 season was a record one in the domestic sugar industry. Sugar production is expected to reach a new all-time high of 6.54 million tonnes.

Export benchmark

The increase in production volumes forced domestic producers to actively explore the international market, strengthening the country's position as a supplier of sugar products. According to the expert and analytical center of agribusiness "AB-Center", in 2016, 119.4 thousand tons of sugar were exported. At that time, sugar exports were the largest in the industry in the past five years. A more serious leap occurred a year later: according to FCS of Russia and railway statistics provided by Soyuzrossakhar, in 2017, the export of beet sugar from Russia increased fivefold compared to 2016 and amounted to more than 500 thousand tons worth over $ 200 million.In December 2017 alone, 110 thousand tons were shipped abroad sugar, which is very close to the indicator for the entire 2016.

On the world market, Russia is also considered a significant exporter of molasses and largest exporter beet granulated bagasse. In 2016, the export record for molasses was 0.59 million tons, bagasse - 1.21 million tons.

Currently, the main countries-markets for Russian sugar are Kazakhstan, Kyrgyzstan, Azerbaijan and Armenia. In the export of sugar from Russia in 2016, such directions as Belarus and Serbia appeared, trial deliveries of a ship consignment to Syria and a container consignment to Egypt were noted. In 2017, Uzbekistan opened as a sales market, as a result, it came out on top in terms of purchases of Russian beet sugar.

Difficult decisions

According to experts' forecasts, the volume of sugar production in Russia will continue to grow. Thus, many companies increased their production capacity in 2017 and intend to continue the modernization program in 2018. This dictates the need to expand the volume and geography of export supplies. “For the second year in a row, there has been an overproduction of sugar beet in Russia. The harvest this year, like last year, amounted to 51.2 million tons. At the same time, the annual sugar production in the country is at least 600 thousand tons higher than domestic consumption. Everyone understands the need to rebalance supply and demand. This can only be done by expanding exports, ”explained Dmitry Vostrikov, Executive Director Association "Rusprodsoyuz".

At the same time, Russian manufacturers may face a number of difficulties along the way. One of the obstacles to increasing sugar exports is logistics. “Well-established export needs high-quality logistics. And Russian logistics is far from the most efficient and cheap, - explains Evgeny Ivanov, a leading expert of the Institute of Agricultural Market Studies. - We have relatively high time, documentary and transport costs. Therefore, a sugar consumer, for example, from Cameroon, is more likely to choose a supplier in Ukraine or the European Union. It is also necessary to develop water and river routes in the Russian Federation, including for container shipments. All local markets in a wide range of Russian products need to be systematically and actively involved: to participate in trends, exhibitions, to work out the logistics of supplies. "

Madiros Oskanov, manager of the Timashevsky sugar plant of the Pokrovsky concern, also speaks about this: “In 2017, Russia sold almost the entire surplus of 2016 - 500 thousand tons of sugar. But selling more is very problematic, since our export terminals are not ready to handle such a large amount of cargo. There is also the problem of monopolization in the transport sector. For example, in the port of Odessa, transshipment of a ton of sugar costs $ 20, and in the only deep-water port in Russia, Novorossiysk, it costs $ 40. This is a very high cost, but Russian manufacturers simply have no choice. "

And this despite the fact that manufacturers in the south of the country have some advantage in logistics. According to Vadim Gomoz, an expert of the industry Internet portal Sugar.ru, sugar factories in the south of Russia have logistics competitive advantages when supplying sugar to Azerbaijan, Armenia and the Black Sea ports, for export by sea. The transport components of exports in these directions for factories located in the Krasnodar Territory are lower than for factories in the central part of Russia. Large sugar producers operating in the south of the country are Agrocomplex im. Tkachev "(four factories), Pokrovsky concern (three factories), Dominant Group (three factories), Prodimex (two factories, including the largest in the country" Uspensky Sugarnik ").

According to the industry Internet portal Sugar.ru, domestic players in the sugar market when exporting products face not only the problems of undeveloped logistics and high prices for sugar transshipment. Another serious problem is the low exchange price for sugar on the world market, at which the Russian producer becomes competitive at an export price of about 22 rubles / kg. However, in 2017, sugar on the domestic market cost 23–26 rubles / kg. In addition, experts say that not all Russian sugar meets international quality standards. So, the internationally recognized sugar standard has a color of 45 ICUMSA (an indicator characterizing the degree of color of a sugar solution due to the presence of dyes from sugar production in sugar crystals. - Ed.), In Russia it is usually 60; there are other quality parameters, according to which our sugar does not always correspond to the world level. To solve this problem, according to experts, it is necessary to modernize sugar production lines.

The state will support exporters

In December 2017, the Ministry of Agriculture, by order No. 524, approved a program to expand sugar exports. The measures are aimed at expanding the geography of export supplies of sugar and sugar by-products.

The program adopted by the Ministry of Agriculture assumes that agreements on cooperation with the Philippines, China, Japan, Vietnam, Algeria and Morocco will be concluded by 2020.

According to experts, new sales markets, especially such large ones, are good, but it is not yet clear whether it will help new program export to solve other problems - undeveloped logistics, high cost of sugar transshipment. In addition, in order to be successful in the world market, domestic producers need to find opportunities to reduce the cost of sugar production, as well as bring its quality up to international standards. And this can only be done through a large-scale program of modernization of production facilities. “Plants need to cut costs. It will be possible to reach the cost of sugar up to 22 rubles. - and you are the king in foreign markets, ”notes Madiros Oskanov.

Despite all the difficulties, according to the forecasts of the Ministry of Agriculture, in the 2017-2018 season Russia can export from 700 thousand to 1 million tons of sugar, displacing traditional competitors in foreign markets - Ukraine, Belarus and Brazil.

Victoria Oberman

The export of beet sugar from Russia in 2017 increased fivefold and amounted to more than 500 thousand tons for a total amount of over $ 200 million, reports Soyuzrossahar with reference to FCS data and operational railway statistics. "In December 2017 alone, over 110 thousand tons of sugar were shipped from the territory of Russia," the message says. The largest export volumes last year fell on traditional countries - Azerbaijan (105 thousand tons), Kazakhstan (129 thousand tons), Tajikistan (27 thousand tons). Uzbekistan became a promising new market for Russia, where 109 thousand tons were shipped.

In the 2016/17 season, we had a number of unexpected buyers - Belarus (24 thousand tons), Armenia (6.2 thousand tons), and from non-CIS countries - Serbia (2.5 thousand tons), the leading expert adds. Institute for Agricultural Market Studies ( ICAR) Evgeny Ivanov. Also, trial deliveries were made through Novorossiysk of a ship consignment to Syria and a container consignment to Egypt, which, however, have not yet been continued this season. At the same time, exports to Belarus and Armenia remained at the beginning of the 2017/18 season - from August to November, 35 thousand tons and 10 thousand tons of sugar were shipped to these countries.

At the same time, sugar imports from Belarus decreased by a quarter - last year, according to analytical service Soyuzrossahar, it amounted to 185 thousand tons against 250 thousand tons in 2016. In December, Belarus exported about 25 thousand tons of sugar, of which 17 thousand tons fell on Russia (in December 2016 - 18 thousand tons). In general, according to the statistics of the Federal Customs Service, the volume of imports of white sugar to Russia in January-October decreased by 3.3% to 217 thousand tons. “Since August 2015, for the first time in many years, there has been a disparity in wholesale prices for sugar - we have it cheaper, than in Belarus. This has intensified the export from Russia to the union state by road, - explains Ivanov. - At the same time, exports from Belarus decreased by railroad- it is mainly packaged sand and cubes for retail chains, as well as extra sugar for industrial producers. At the same time, Russia still remains a net importer of sugar from Belarus and will remain so due to political factors. "

The export of by-products of the sugar beet complex in 2017 exceeded 1 million tons of beet pulp and 700 thousand tons of molasses, which corresponds to the level of 2016. As noted Soyuzrossahar, the increase in the rate of export of pulp and molasses was hampered by the untimely and insufficient supply of wagons for transportation. In the same time possible growth domestic consumption for desugarization, feed, production of yeast, alcohol and other products can lead to a decrease in the rate of export of molasses from January, analysts do not rule out ICAR.

In calendar year 2017, beet sugar production amounted to 6.6 million tonnes, reaching a new all-time high. Experts predict a similar volume in the 2017/18 season (in 2016/17 there were 6.2 million tons). Sugar surplus as of January 1, 2018, taking into account import from Belarus Soyuzrossahar estimates at the level of 800 thousand tons. "If the rate of shipments is maintained, the total volume of sugar exports before the start of the 2018 harvest season may reach 500 thousand tons," the industry union predicts. According to Ivanov, taking into account shipments to Uzbekistan, such a volume is quite achievable. “Export to Uzbekistan has been increasing since the end of October and in the last days of December there was just a huge shipment. If the political winds in Uzbekistan do not change, and high volumes of supplies from Russia continue, then our exports may reach 500 thousand tons, which was unexpected for many at the end of October, ”the expert says.

At the same time in the review ICAR over the past year, it is noted that there remains extremely high competition in the general sales markets with sugar from Ukraine, Belarus, Azerbaijan, Brazil, and especially this season from the EU countries. With regard to sea exports, they are still limited by the high costs and low capacity of the only deep-water port capable of loading food in bags.

The price of sugar in Russia has decreased by more than 1.5 times. In 2016, the wholesale price of sugar exceeded 35 rubles / kg; as of February 2020, it is at a historically low level of 20 rubles / kg.

At the end of the 2016/17 agricultural season, sugar production exceeded domestic consumption, and producers did not find demand in world markets either.

Due to this situation, three factories are being closed:

1. Meleuzovsky sugar plant in Bashkiria (part of the Prodimex group);

2. Nurlatskiy sugar plant in Tatarstan (part of the local Agro-invest group);

3. Tovarkovsky sugar plant (owned by the structure of the Russian Agricultural Bank) in the Tula region.

2017

Russia prepares to seize share of the sugar market

According to the results of the agricultural year from August 2016 to July 2017, Russia intends to increase sugar exports 25 times from 8 thousand to 200 thousand tons, the minister said. Agriculture RF Alexander Tkachev.

“We predict that by the end of the season about 200 thousand tons of sugar will be exported, - the head of the Ministry of Agriculture noted. - For comparison: last year, Russia sold 8 thousand tons of sugar, that is, tenfold growth! This opens up great opportunities not only for agriculture, but also for the dynamic development of the economy as a whole, "the minister is sure.

EU plan to reduce sugar imports and increase exports

In March 2017, it became known that Europe intends to deal a crushing blow to trade, which once accounted for almost a fifth of total imports.

The EU's decision to lift restrictions on its sugar beet products from October 2017 means a decrease in demand for sugarcane producers from Jamaica in the Caribbean to the Pacific island of Fiji and Swaziland in southern Africa.

Jamaica, Belize and Mauritius were among 10 countries that benefited from duty-free shipments of 1.6 million metric tons of unrefined sugar to the EU in 2015-16.

And as long as countries maintain these privileges, their plantations will be able to compete with EU farmers, whose incomes and yields are growing. European production could rise by about 17% to over 20 million tonnes, and imports could be cut by about half if changes are made, Rabobank said.

Fiji, Mauritius, Belize and Guyana export about 80% of the EU's sugar, Jamaica 60%, according to a report by LMC International Ltd. Some also have some of the highest spending levels.

Belize and Guyana produce less than 6 tons of sugar per hectare, compared with an average of around 10 tons for giants like Brazil, says LMC. They ship cane sugar to Europe, with about a third going through the UK. Shipments from most other countries are subject to high import duties.

Manufacturers have already reduced their dependence on the industry, which is a small part of their economy. Mauritius expanded textile and travel business... The country has increased processing to add value to its crops and is looking to sell specialized types of sugar such as brown cane sugar and demerara.

For many countries, however, sugar remains a major export and a source of hard currency and rural employment.

"Despite the fact that we depend on it now and we will depend on it for some time, we need to move on to products with high added value: ethanol and rum. You know, Jamaica is famous for its good Jamaican rum," said Karl Samouda, Minister agriculture and industry in Jamaica.

While sugarcane accounts for about 80% of total sweetener production, producers risk not only losing their most important market but also facing new competing exporters such as expanding European producers. This will increase the supply in the market and lower prices.

Rabobank estimates that European producers producing premium sugar at world prices could go through a downturn to below € 100 ($ 106) per tonne from € 146 from 2009 to 2016.

1973: Britain joins the EEC and seeks sugar benefits for the former colonies

EU trade and economic cooperation with Africa, the Caribbean and the Pacific countries producing sugar began with the birth of the European Economic Community in 1957. After joining the EEC in 1973, the UK entered into an agreement to extend the bloc of trade relations on a preferential basis, which she offered to the former colonies.

The system has evolved from fixed-price purchases to duty-free access. Imperial holdings such as Barbados lived off the sugar trade and slaves who lived and died working on the plantations.

The result not only changed European tastes, with the result that jam and tea with sugar and coffee fell in love with the masses, but also made it possible to earn a fortune, which stimulated capital and insurance markets in London and Amsterdam. The demand for pig iron and machinery used in sugar and petroleum refining, as well as the extra calories that fed the growing working class, led to the Industrial Revolution.

19th century: France launches beet sugar production due to British blockade

The European sugar beet industry has its roots in one of the defining events of European history: the naval blockade of Great Britain by Napoleonic France in the early 19th century, which forced the French to seek alternatives to Caribbean supplies.

17th century: Europe begins to consume sugar

The sugar addiction of Europeans has changed the world. Sugar plantations in the West Indies, built in the 17th century, contributed to the concentration of trade, capital and production, which subsequently grew into the industrial revolution and paved the way for the development of modern financial markets.

Russia will also make money on sugar exports. From these supplies, you can get almost a third of what the long-developing export gives only at first. sunflower oil... Sweet tooths are worried if this will raise prices on Russian counters.

The Ministry of Agriculture and the Ministry of Economic Development must develop measures to expand sugar exports from Russia by December 5 this year. This order was given to the departments by Prime Minister Dmitry Medvedev.

The record harvest of sugar beet in the country will make it possible to produce 6.5 million tons of sugar. You need much less for your own consumption. The surplus will be exported.

As a result, the finished product of the Russian agroindustry will become one of the most significant export items along with raw materials - grain and corn. And will replenish the list of export food, which already contains sunflower oil and confectionery... The head of the Ministry of Agriculture Alexander Tkachev estimated the volume of possible sugar supplies abroad at 700 thousand tons. With today's market value sweet product Russian producers can gain 375 million dollars or almost 22 billion rubles, explained " Russian newspaper"at the Expert and Analytical Center for Agribusiness" AB-Center ".

"By comparison, this is 8.9 percent of the value of wheat exports, 88 percent of the value of barley exports, 26 percent of the value of sunflower oil exports, and roughly comparable to the value of soybean oil exports," says general manager center Alexey Plugov.

This year, granulated sugar has fallen in price by 9.6 percent. And it would be better if he stopped. Otherwise, prices will skyrocket in 2018

The consequences of sugar abundance in the country have already been felt by consumers. On store shelves, granulated sugar, according to Rosstat, this year has fallen in price by 9.6 percent. Could the outflow of sugar overseas change this trend? The experts interviewed by RG reassure them: sugar prices will not rise significantly.

But it is better not to wait for a further decrease in the cost of the product. Moreover, it is desirable to avoid it. Otherwise, the profitability of sugar production will decrease, and enterprises will reduce their sugar beet sowing. And then the rise in sugar prices is quite possible.

In order to implement plans for the supply of sugar abroad, it is necessary to remove a number of restrictions, experts say. "We have learned to export grain, vegetable oil, and export finished products we don't know how yet. The costs are too high ", - notes the leading expert of the Institute of Agricultural Market Studies Evgeny Ivanov. World sugar exports are about 60 million tons. The share of beet sugar in world exports is less than 5 percent. So Russian sugar is a rather specific product for world trade, you need to find sales markets, the expert explains.

First of all, it is possible to expand supplies to the CIS countries, to Afghanistan, Mongolia, and the DPRK. This requires that countries Customs Union abandoned duty-free imports of white sugar from third countries and lowered their quotas for duty-free imports of raw sugar, notes Evgeny Ivanov. This can be resolved in negotiations within the framework of the Customs Union. However, the maximum export of sugar to traditional Russian markets can be from 400 to 600 thousand tons.

In 2016, as a result of record production of beet sugar Russian market sugar changed from net import to net export. Prices, which have been declining since the beginning of the year due to the strengthening of the ruble, reached a two-year low in December due to overproduction.

Domestic production

As a result of a sharp increase in the sugar beet crop in 2016, Russia produced a record 6.1 million tonnes of beet sugar per season, reaching an overproduction level of 100 thousand tonnes.

In 2016, a record amount of sugar was produced in Russia. Due to the record volume of harvested beets, the processing season, which usually falls in August-December, lasted until March. As a result, in general, for the 2016 season (August - February) sugar production was 20% more than in the previous season (August - December) - 6.1 million tons, including 5.8 million tons in August - December (an increase by 13.7%).

The volume of raw sugar production in Russia in 2016 was insignificant. At the end of 2016, the production of raw sugar was reduced by half - to 0.3 million tons (including production from molasses), which is 5% of the total volume of sugar produced at the end of the year. The low share of imported raw cane sugar is due to government policies aimed at protecting and developing the beet sugar complex. High import duties on raw sugar make processing less profitable than sugar beet.

The increase in the sugar beet crop in 2016 was associated with three main reasons: an increase in arable land for growing sugar beets, an increase in yields and an expansion of processing capacity.

High sugar prices in 2015 encouraged agricultural producers to sow more and more areas. As a result, the acreage of sugar beet in Russia increased by 9% - to 1.11 million hectares in 2016, and the gross harvest amounted to 48.3 thousand tons. At the same time, the yield increased by 19% to a new record of 46.7 tons / ha, due in part to favorable climatic conditions... The high humidity level, however, led to a decrease in the sugar content from 18% a year earlier to 16%.

Meanwhile, the growth in the capacity of beet processing plants and the high productivity of the industry are the result of investments in recent years and the ongoing modernization of the industry. Over the past five years, the productivity of the sugar beet complex has grown from 4.1 tons of sugar per hectare of crops to 5.3 tons per hectare.

Only 9 out of 21 sugar beet processing regions in Russia managed to complete work by January 2017. In total, sugar beet was processed at 75 factories in 21 regions, six of which account for the bulk (Krasnodar Territory, Voronezh, Tambov, Lipetsk, Belgorod and Kursk regions). The Krasnodar Territory with distinctively favorable soil and climatic conditions produces about a quarter of all Russian sugar.

The per capita sugar consumption in Russia is one of the highest in the world, and the total consumption is estimated at more than 5.7 million tons. At the same time, in 2016, as a result of a decline in living standards and an increase in direct consumption of sugar, per capita consumption even increased slightly, reaching the level of 39 kg per year.

Prices

High sugar production and limited export opportunities led to a decline in wholesale sugar prices in 2016.

The seasonal price cut in August - December 2016 turned out to be deeper than usual. During this period, wholesale prices fell by 28% - from 42.7 thousand to 30.7 thousand rubles. per ton, reaching the minimum values ​​for the last two years - 30.7 thousand rubles. per ton.

Import

In 2016, 530 thousand tons of sugar were imported to Russia - almost half as much as in the previous year. In the early 2000s, Russia was the largest sugar importer. So, in the 1999/2000 season, 6.2 million tons were purchased.

The development of the beet sugar industry thanks to the support of the state and, in particular, the implementation in 2010-2015 of the sectoral program "Development of the beet sugar subcomplex" has made it possible to significantly reduce the volume of sugar imports.

At the end of 2015, 445 thousand tons of white sugar and 507 thousand tons of raw sugar were imported to Russia. In 2016, imports of white sugar decreased by 39%, to 270 thousand tons, and imports of raw sugar, almost halved to 260 thousand tons.

The main volume of raw cane sugar is supplied to Russia from the countries of South America, and the leading importers are Grasp, Syukden and Rusagro Group. Almost the entire volume of white sugar supplies (83%) falls on the CIS countries and, in particular, on Belarus (250 thousand tons).

Export

The high level of sugar production in 2016 led to a sharp increase in exports, which, however, are still far below their potential, estimated at 700 thousand tons.

Record volumes of sugar production in 2016 not only satisfied domestic needs, but also allowed a sharp increase in export volumes. As of the end of January 2017, about 100 thousand tons of sugar were exported from Russia against 8 thousand tons in 2015. Traditional buyers of Russian sugar are the CIS countries, as well as Afghanistan and Mongolia. At the same time, the largest volumes are supplied to Kazakhstan and Tajikistan.

Currently, the main competition for Russian sugar in the world market is sugar from Ukraine, the surplus of which in 2016 was estimated at 400 thousand tons. The existing quota of the World trade organization(WTO) duty-free import of raw sugar in the amount of 270 thousand tons ensures low domestic prices for sugar in Ukraine and its presence in other markets.

Due to the underdevelopment of the domestic sales market, Russia still remains a significant exporter of molasses and beet granulated bagasse, despite the growth in consumption of molasses for desugarization, feed, yeast, alcohol, etc. general production v Russian Federation will be approximately 30%.

 

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