Should French farmers be afraid of Ukrainian sugar?

French farmers are asked not to increase the area of sugar beet sowing due to strong competition with Ukrainian sugar. This shows that Eastern Europe is already afraid of the import of agricultural products from Ukraine, especially in view of the European Commission's cancellation of restrictions on supplies.

O. Korotynskyi, director of the "Sugar Beet Production" NPC, comments on the situation. According to him, sugar in Europe now costs 915 €/t or 983 $/t, which is 57% higher than last year's price and 2 times the price of July 2021. This price is due to the shortage of sugar due to the reduction of production in France, where the area under beets are the smallest in the last 14 years. At the same time, against the background of high sugar prices and low grain prices, farmers can significantly increase the area under beets in 2024.

The head of the Union of Beet Growers (GGB), Frank Sander, believes that "factories should sell sugar at €1,000/t to recoup the price of beet, which has doubled to €50/t (with a sugar content of 16%). At the same time, a sharp increase in the area under beets can collapse prices by 30% or more, especially considering the projected deliveries from Ukraine."

In 2023/24, the EU can import 2.5 million tons of sugar, of which 0.5 million tons come from Ukraine. Domestic sugar is already included in the European balance sheet, although this causes certain concerns among EU processors.

In order to become an equal participant in the European sugar market, Ukrainian producers must be predictable and reliable, as well as adhere to the "from field to table" strategy adopted in the EU, when every buyer can trace the chain of origin of products. Important criteria are reputation and integrity, including timely and full payment of taxes, official salary, open and reliable information about activities. Europe does not want to see in its market those who promote its toning or practice schemes from the early 2000s. In the EU, the sugar market has been consolidated for a long time between a dozen large companies that have developed fair trading rules.

During the war, domestic sugar producers became leaders in the export of agricultural products. Thus, in 2022/23 MR, the share of sugar in Ukrainian supplies to the EU amounted to 18%. In FY 2023/24, it may increase if the state introduces the predicted rules for honest market participants and removes unscrupulous traders from it, and in the event of a change in rules, offers a transition period so that exporters have time to fulfill their obligations.

Liberalization of the EU agricultural market allowed Ukraine to export surplus sugar there, while its own production in the EU decreased and prices doubled. Thanks to this, sugar beets in Ukraine became the most profitable crop in 2022, therefore, in 2023, the area under them increased sharply, although difficult weather conditions slightly reduced the harvest. Currently, the yield of beets is estimated at 50-55 t/ha, and the sugar content at 16-17%, which will allow obtaining 1.6-1.7 million tons of sugar.

If the forecasts are justified, domestic producers will supply domestic consumers and will be able to export part of their products to the European market.