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Association head warns of closure of Ukrainian sugar factories due to EU import curbs

by Vladyslav Kudryk February 9, 2024 1:29 PM 2 min read
Workers load bags of refined white sugar onto an elevator at the ED&F Man Ltd. refinery in Mykolaiv Ukraine. (Vincent Mundy/Bloomberg via Getty Images)
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Possible restrictions on Ukrainian sugar exports to the EU may lead to the closure of sugar factories, said the acting chair of the board of the National Association of Sugar Producers of Ukraine, Nazar Mykhailovyn, as reported by the Interfax-Ukraine news agency on Feb. 7.

The European Commission proposed on Jan. 31 that import duties on Ukrainian exports to the EU should remain suspended until June 2025, but different rules apply for "the most sensitive products," namely Ukrainian sugar, poultry, and eggs, which will be capped at levels from 2022 and 2023.

Curbs "will be very detrimental" to Ukrainian sugar producers, Mykhailovyn said.

"Restrictions, licensing, and bans will lead to overproduction in the current season and the closure of factories."

According to the association, Ukrainian sugar factories produced 1.8 million metric tons of sugar in the 2023-2024 production year, with the country's domestic demand being 900,000 metric tons. The country's sugar exports last season were one of the largest on record.

Mykhailovyn noted that food processing companies are the main consumers of Ukrainian sugar in the EU.

"They are interested in Ukrainian sugar because it is of high quality, meets EU standards, and is to some extent cheaper than in most EU countries."

If the EU introduces quotas or any other restrictions, Ukrainian sugar producers will have to seek other markets, in particular in Asia and Africa and other non-EU countries, which will require access to the sea route, Mykhailovyn said.

According to him, the logistics costs have risen almost two-and-half times due to the blockade of Polish and Hungarian borders.

The free trade agreement with the EU designed to help Ukraine's economy during the Russian invasion first came into effect in June 2022.

The import of Ukrainian agricultural products has been the source of protest for various farming groups in countries neighboring Ukraine, such as Romania and Poland, with farmers claiming that the liberalization of import rules for Ukrainian products hinders their ability to remain competitive.

Inspections of agricultural goods at the Ukraine-Poland border showed excess imports of goods and a need to strengthen veterinary inspections, Polish Agricultural Minister Czeslaw Siekierski said on Feb. 4. According to him, the excess goods included sugar, oil, and cereal products.

The European Commission's proposals will be considered by the European Parliament and the Council of the European Union. The European Commission is aiming to "ensure a seamless transition" to the new rules when the previous regime expires on June 5, 2024.

UK extends tariff-free trade with Ukraine until 2029
The previous arrangement, which removed levies on all U.K.-Ukraine trade, was due to expire in March 2024 after being introduced in 2022 following Russia’s attack on Ukraine. All tariffs on goods imported from Ukraine were reduced to zero, and all quotas were removed under the free trade agreement.
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