Support from the Interventional Sugar Fund should begin as early as next year.
Recently, the Cabinet of Ministers included sugar in the list of goods for co-interventions. Previously, this tool was used mainly for wheat.
This means that now the government will regulate sugar prices, buying it from producers at relatively low prices, and then (in case of a rise in price) «knock down» the price by throwing additional goods on the market.
The situation with sugar prices in Russia in recent years has been difficult:
2019 — price drop by 27% due to accumulated surpluses. Buyers are happy, manufacturers are losing profits.
2020 — price growth by 64% (including due to a rollback after the previous decline). Producers are making a profit, buyers are terrified. The President of the Russian Federation draws attention to this situation, after which the maximum cost of sugar is introduced at the level of 36/45 rubles per kilogram (wholesale-retail). Producers who comply with these conditions are paid subsidies.
Price caps existed until March 2021, then it was decided to allow duty-free import into the country up to 350 thousand tons of sugar from abroad. But due to such a small volume, this decision did not affect anything — prices did not decrease.
The next government tool is the intervention fund. True, he can begin his work no earlier than next autumn.
How will the intervention fund help Kuban producers?
The Krasnodar Territory will become one of the main beneficiaries of such a fund, because it is there that most of the sugar factories are concentrated. Now in the Kuban there are 14 such facilities that produce up to 22.5% of all Russian sugar.
At the same time, two factories have already closed over the past year, which means that state support for such factories will not be a problem.
This season, 9 million tons of sugar beets were harvested in the Krasnodar Territory. It is planned that about 1-1.1 million tons of sugar will be produced from it.
And this is a significant part of the total volume of Russian sugar production in the 2020-2021 season. According to Soyuzrossahar estimates, the total production will be about 5.8 million tons.
In general, the appearance of the intervention fund pleases the experts.
“We have a positive attitude to the creation of the intervention fund, the only pity is that its real filling may begin no earlier than autumn 2022. If properly organized, this is one of the least traumatic instruments of state regulation for the market, ”says Dmitry Rylko, General Director of IKAR .
The very idea of such a fund (instead of fixing maximum prices) is already a tool to support producers.
But how effective it will be and whether the volume of 500 thousand tons of sugar will be enough for the fund to influence prices, we will see next year.
