Why Ukrainian sugar imports to EU face significant reduction

The European Commission is planning to significantly reduce sugar imports from Ukraine, according to a Reuters report.

This decision comes after EU producers voiced concerns that the influx of Ukrainian sugar has led to a dramatic drop in sugar prices.

The EU has faced a larger dilemma in the last three years, of which sugar imports from Ukraine are a part.

The EU initially granted Ukraine free access to its agricultural markets in response to Russia’s invasion. However,  it has since reduced this support due to protests from EU farmers.

Disruptions for EU

The influx of agricultural products from Ukraine has significantly disrupted the European Union’s farming sector. Local farmers contend that these imports have flooded the market, leading to a surplus of supply. 

This oversupply has, in turn, driven down prices for agricultural goods, making it increasingly challenging for EU farmers to compete and secure a profitable market for their produce. 

The resulting financial strain has raised concerns about the long-term viability of many EU farming operations.

According to the report, EU agriculture commissioner Christophe Hansen expressed the intention to reduce sugar imports when he met with French farm union leaders and industry representatives at the Paris farm show in late February.

Hansen did not specify the exact amount by which imports could be reduced but stated that they would be significantly lower than current levels.

He would also address other imports from Ukraine, such as grains, but did not provide specifics, the report stated.

EU-Ukraine deal?

During an online conference last week, Ukrainian Deputy Economy Minister Taras Kachka expressed optimism regarding the potential for a just and equitable agricultural agreement between the European Union and Ukraine. 

This agreement would aim to address concerns related to agricultural trade and ensure a balanced and mutually beneficial relationship between the two regions.

“The EU understands that we cannot bang our heads against the wall and return to the terms of trade that we had 10 years ago,” he said.

Today we still have time to find a constructive solution, we still have a few weeks – we are waiting. Ukraine is as flexible as possible and is ready to ensure transparency in trade. This is more a matter of politics than trade.

The 2022 Russian invasion of Ukraine prompted the EU to eliminate duties on Ukrainian agricultural products. 

As a result, imports of cheaper Ukrainian sugar surged to 400,000 tons in the 2022-23 season and over 500,000 tons in 2023-24, drastically exceeding the pre-war quota of 20,000 tons.

Prices and quota

EU data revealed that European sugar prices fell by over 30% last year, but white sugar futures have recovered in the last two months due to a weakening outlook in major producing countries like India.

Last year in July, the EU reintroduced an import quota of 262,650 tons due to European farmers’ complaints against unfair competition.

Ukraine was forced to reroute sugar shipments to other countries, with Turkey as the main destination, after the EU stopped sugar imports from Ukraine due to the exhaustion of the first part of the quota, Ukrtsukor, Ukraine’s sugar union, reported.

In January, the second part of the quota for 109,440 tons of Ukrainian sugar was opened. However, Ukraine has only exported a small amount of this quota so far.

EU data reveals that sugar consumption within the EU has remained stable at approximately 14 million tons. 

Imports account for 2 million to 3 million tons, while EU sugar production has fluctuated between 14.5 and 17.6 million tons annually since 2018, contingent upon the sugar beet crop.

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