Russian sugar production down, efficiency up

- Last updated on GMT

Related tags: Sugar

Russian white sugar production from imported raw beet is reported
to be down by 23 per cent for the start of the year, as the sector
struggles against diminished supplies of raw materials and high
stocks of unsold processed sugar. But after a disastrous 2003, the
sector looks set to become more efficient and competitive in the
year ahead.

The Union of Sugar Producers said that production for the period 1 January to 24 March amounted to 639,200 tons, down from 786,200 tons in the same period last year. The Union also reported that refineries had imported a total of 580,400 tons of raw sugar beet during the same period. This figure is 31 per cent down on the same period last year, indicating that many of the refineries have built up higher stocks of raw materials.

Analysts are predicting that raw sugar imports will drop to a total of 3 million tons this year because of a fall in demand. Last year total imports stood at 3.94 million tons, which in turn was a drop of 13 per cent on the 2002 levels. Historically the highest import rate was set in 1999 when 5.31 million tons was imported.

In recent years the sugar processing sector has suffered under the weight of poor logistics, erratic raw supplies and a lack of financing for facilities. This has come about despite a huge growth in the demand for sugar as food manufacturers race to meet increasing demand for snacks, confectioneries and processed foods which all use sugar as a key ingredient.

Svetlana Nikolaeva, a senior analyst with the Internationl Sugar Company (Russia), pointed out some of the prevailing market conditions affecting the sector in an interview with Ceefoodindustry.com​ last month. "The demands for sugar from the food processing industry were high in 2003 and to feed this there was a significant surge in auction purchases which in fact exceeded supply requirements. This meant that sugar processing factories worked not on demand, but 'for immediate processing' requirements. This problem was exacerbated by the fact that the sugar companies have limited opportunities for raw sugar warehousing and storage."

As a result of excess raw sugar stocks which could not be kept, many sugar processors suffered heavy losses, a damaging blow which many are still recovering from now.

However, with some of the most inefficient processing operations now closed down, the government stepping in to regulate quotas on raw sugar and the processing of raw sugar becoming increasingly streamlined, industry analysts believe that the worst is over for the sector and that a more efficient and competitive industry is now emerging.

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