By Tatiana Kovalevskaya
The price of sugar has risen countrywide by 10 percent on average. Since last December, the price has risen by more than 25 percent. Belgospishcheprom Concern and the Trade Ministry explain this unpopular decision by noting ‘current higher retail prices for sugar in neighbouring states’.
The level of consumption of this strategic product has proven stable, with rising prices failing to cool the enthusiasm of Belarusians. Annual sugar consumption in our Republic is estimated at about 380,000 tonnes. Belgospishcheprom Concern promises that there won’t be any interruption in supply, although the world market is experiencing a deficit. Limited supplies are the major reason for rising prices.
According to the UN’s Food and Agriculture Organisation (FAO), in January, the sugar price index rose by 5.4 percent (on December 2009) with raw sugar quotations on world exchanges reaching a 30 year record. This was largely due to great harvest losses of sugar cane in Brazil — the world’s major supplier. Even if the harvest improves this year, prices will continue to grow, as the technologies of sugar cane growing become more costly.
Meanwhile, countries which are major buyers of Belarusian sugar are gradually acquiring their own facilities. “We’re seeing a gradual narrowing of our sales markets,” explains Ivan Danchenko, Chairman of Belgospishcheprom Concern. According to his forecasts, within a couple of years, Ukraine will be completely fulfilling its own processed sugar needs. This year, we will sell just 25 tonnes of sugar beet to our southern neighbour, against 93 tonnes last year. Central Asia is also developing its sugar processing, with a Turkish investor setting up a large company in Azerbaijan; it is already a rival to Belarusian plants within this market. Russia is aiming to increase its production capacities to handle 4m tonnes of beet sugar, and up to a million tonnes of raw sugar. In the coming five years, our domestic sugar branch should expand its output by up to 630,000 tonnes.
Belarusian factories plan to raise revenue by increasing their depth of processing to create more refined sugar, packaged more carefully. “We won’t be selling in bags anymore; we’ll improve our packaging to make it more attractive,” notes Mr. Danchenko. Moreover, each sugar factory will diversify its produce. Tinned fruit in syrup, marmalade, jam and yoghurt fillers are to be made in Gorodeya while Skidel Sugar Refinery is to add citric acid to its line-up. A yeast factory is to be constructed in Slutsk while a line of caramel production is to be put into operation in Zhabinka.
As far as the construction of a fifth sugar refinery is concerned, Belgospishcheprom believes that this project can only be implemented by attracting direct investments. The idea is being negotiated with a range of Polish and German companies, with results yet to be announced. “We have spheres in which to invest and, by developing our existing factories, could gain the same capacities while spending 50 percent less on resources,” adds Mr. Danchenko. He notes that a fifth sugar refinery could be constructed with state support but the factory is unlikely to pay for itself.