Sugar will become a quota
The efforts of sugar beet producers, who tried by all available means to reduce the supply of cheap raw sugar to the market, were crowned with success. From April 1, 2000, Russia will most likely introduce quotas for the import of raw sugar in the amount of 3.5 million tons. Import quotas for raw sugar will lead to an increase in sugar beet production in the country and an increase in prices for white sugar.

The capacity of the Russian sugar market, according to various estimates, ranges from 4.8-5.5 million tons. Until the mid-90s, 40% of this amount was produced from Russian sugar beets, and 30% from raw sugar imported to us mainly from South America. The remaining 30% came from imported white sugar. Over the past few years, prices for raw sugar have almost halved, as a result of which the share of raw sugar has increased to 70-80%. In order to somehow protect the market from imported raw materials, beet growers insisted on seasonal duties on the import of raw sugar of 45%. The duties were in effect from August to the end of November - while the harvesting and processing of sugar beets was underway. In 1998, they completely justified themselves: the factories easily processed the entire harvest.
This year the results were just the opposite. Even before the duties came into force, importers made the main supplies of raw sugar and saturated the market. Therefore, already in September, the idea appeared to introduce quotas on the import of raw sugar in the amount of 3-4 million tons. However, the mechanism for introducing quotas is quite complex, and beet growers did not have the strength or time to “push through” them. Then they found another way to solve the problem. Its essence boils down to the following. Duties on raw sugar are increased to 30% instead of the current 5%. At the same time, developing countries (and they are mainly the main suppliers of raw sugar) have the opportunity to import 3.5 million tons of raw sugar at the previous rate. Thus, on the one hand, Russia is tightly “closed” by duties, on the other hand, it receives the raw materials it lacks.
The conditions for introducing new duties will be discussed at the end of this week at a meeting of the government commission on protective measures in foreign trade. If for some reason this scheme does not work, beet growers will still have seasonal duties on raw sugar. According to the chairman of the council of the Union of Sugar Producers, Yuri Mikhailov, next year their validity period may be increased by 1-2 months. For example, seasonal duties will come into force not in August, but in June. Limiting the supply of raw sugar will undoubtedly have a beneficial effect on the beet industry. However, it will most likely be followed by a price increase. According to experts, by the fall of next year sugar will rise in price by 10-15%.

DMITRY Ъ-DOBROV

Newspaper "Kommersant" No. 236 dated December 21, 1999, p. 7

Authors:

Dmitry Dobrov