Ukrainian sugar factories do not want to work because of gas prices

Some businesses are already refusing to start operations this season. Others warn that sugar prices could almost double.

Ukraine started the «Sugar Year» very well this time. The harvest is underway, and the indicators are positive: 3.5 million tons of sugar beets have already been harvested, while 35% of the sown area has been harvested.

Harvest per hectare is not bad: on average 440 tons, maximum — 559. And the sugar content in beets — one of the main indicators — is at a high level.

According to the forecast of the Ukrainian Ministry of Agriculture, in the new season it will be possible to produce up to 1.4 million tons of sugar, which is + 30% compared to last season .

Plus, over the past 12 months, the Ukrainians have not yet eaten all the sugar produced, up to 422 thousand tons should remain. This means that the final «sugar balance» will amount to +1.74 million tons.

This is more than the annual consumption of 1.25 million tonnes. Will even remain for export.

It turns out that no problems are planned with sugar in Ukraine in the coming year.

Everything would be fine, but the Ministry of Agriculture did not include one important variable in its calculations: the price of gas.

Sugar factories close due to gas


There are 34 such factories in Ukraine. 19 of them operate on gas. However, 4 have already refused to enter the new season and start production.

The reason is simple — gas. A year ago a cubic meter cost 7-8 hryvnias, now it is 28 hryvnias. The Pervukhinsky sugar plant in the Kharkiv region opened and processed 70 thousand tons of sugar beets, but at the same time it spent 77 million hryvnias.

There is practically no alternative to gas. Some people use fuel oil, but it has also risen in price.

Even the enterprises’ own production of sugar beets does not help! Last year, 55% of the cost of sugar was raw materials, but now up to 70% is gas.

Will prices go up?


There is no doubt about that. The only question is to what level.

Now the wholesale price of sugar from factories is at the level of 23-24 hryvnia per kilogram. But with the new gas price, the production cost will rise to at least 30-32 hryvnia.

Accordingly, the plant will sell its product for no less than 40 hryvnia. Well, on store shelves, customers will see a number close to 50.

It would seem, what could be worse? But it turns out it can.

Yuriy Ilchenko, General Director of the Kharkivsakhar Association, is sure that next season most enterprises will not even want to plow their fields for sugar beets. After all, it is obvious that the business is completely unprofitable.

And then, after a critical drop in production volumes, a real crisis will come.

At present, representatives of the sugar factories have already sent a letter to the Prime Minister of Ukraine Dmitry Shmygal with a message that they need 300 million tons of gas.

But there is very little hope that he will immediately send gas. After all, such requests are now coming to the government from all sides.