Monday, 20 July 2020
The Ministry of agriculture supports the export of sugar
On 16 April the Government signed a decree No. 522 (hereinafter - Decree), allowing domestic sugar producers to conclude an agreement for the export of white and raw sugar outside the customs territory of the Eurasian economic Union (EEU).
The main goal is to support the export of Russian sugar due to low prices in the world market by improving its efficiency in the formation of large batches and optimization of logistics costs. Pursuant to paragraph the provisions of the Decree, the Ministry of agriculture on the basis of balance of supply and demand of sugar in the domestic market, has prepared and placed for public discussion a draft Order, which determines the required volume of sugar exports outside the EEC in the amount of 1000 thousand tons for the period August-July 2020/21.
The excess volume of sugar production over its consumption in Russia in recent years has led to high inventory levels of sugar in the country, which together with low world sugar prices and lack of external demand led in 2019 to lower prices in the domestic market by 43% to minimum values for the last 7 years. Low prices for sugar and sugar beets has led to decrease of profitability of agricultural producers and reduction of sugar beet in 2020 by 18% and the closure of 4 sugar factories.
In season 2019/20 production volume of beet sugar in Russia reached a historic high of 7.7 million tons, with annual consumption of sugar in the country is 5.9 million tons. For the past 10 months the Russian sugar is the cheapest in the world, which has become a major factor in the increasing volume of its exports in the current season to 1.2 million, of which 930 thousand tonnes was exported outside the EEC.
The implementation of Government Decree No. 522 of April 16, 2020 is one of the measures to support the sugar industry, as a surplus market, export is one of the tools to have a better balance of supply and demand of sugar in the domestic market and support the domestic price level, ensuring the reproduction of beet sugar. In this Decision and Order does not limit the free export of sugar, and they cover parties that have expressed a desire to conclude an agreement for export of sugar on the basis of its coordination with the FAS of Russia.
Translated by service "Yandex.Translation"