Ukraine in the season-2023 can export more than a third of the produced sugar, as about 1 million tons is enough to meet the needs of the domestic market, while the production forecast is 1.6-1.7 million tons, CEO of Astarta agroholding Viktor Ivanchik said.
“The opening of the sugar market by the European Union (in 2022 – IF-U) has significantly helped Ukraine. We can export a third, if not more, of this year’s crop. We have enough in Ukraine about 1 million tons. This year’s production forecast is 1.6-1.7 million tons. This potential should be unambiguously used. We need to gain a foothold in the markets. Both for the near and distant future – this is a serious factor of Ukraine’s entry into the European Union with its goods, services and labor force,” he said during the Business Breakfast with Forbes Ukraina on Wednesday.
Commenting on the investigation by the Antimonopoly Committee of Ukraine (AMCU) regarding possible cartel collusion between sugar producers, Ivanchyk noted that the AMCU “constantly observes, conducts this or that research.”
“Today we do not see such a problem. It was not there before. We have convincingly proved to AMCU, with whom we have been in communication for the last five years, that there are no violations of antimonopoly legislation. It makes no sense for us to agree on prices and volumes. We compete hard on the Ukrainian market, as it is surplus,” Ivanchyk explained and added that sugar producers are in contact with each other on the basis of the industry association “Ukrtsukor”, but do not discuss the issues of prices or sales volumes.
The CEO of Astarta also noted that with the opening of the market to the European Union, sugar producers and exporters fall under the European regulatory policy. This forces the management of the country’s largest sugar producer to “look even more meticulously at our and all our employees’ compliance with these requirements.”
“I don’t see any risks of coming under investigation,” he stated.
Asked about pressure, particularly from law enforcement agencies on business, Ivanchik declined to voice specific cases, but confirmed that Astarta also has to face such problems.
“To be in society and be free from problems in the business community is unrealistic. “Astarta tries to build relationships on a legislative basis. We are as law-abiding as possible. There is absolutely no reason to suspect us of anything,” he assured and confirmed that his colleagues have to face more complicated problems.
According to the head of the agricultural holding, there is an initiative to create a public association on the basis of the Federation of Employers of Ukraine (FEU), which is called “Manifesto-42” (from Art. 42 of the Constitution of Ukraine on the right of every citizen of Ukraine to conduct entrepreneurial activity – IF-U) to protect Ukrainian business from unjustified encroachments by law enforcement and controlling bodies.
Ivanchyk reminded that business has the right to publicly and legally defend its interests. “Especially since Ukrainian business has now shown very good examples of patriotic attitude, help, selflessness. This should be respected by the state in a partner-like manner,” he emphasized.
The CEO of Astarta noted that business received understanding from the state leadership, in particular, a month ago at a meeting with the President of Ukraine Volodymyr Zelensky, Prime Minister Denis Shmygal, teams of the Office of the President and the Cabinet of Ministers.
“We (representatives of business – IF-U) were assured that the state controlling bodies will pursue a legitimate policy on this matter, communicating with us through the business ombudsman and through our joint structures, such as the Federation of Employers of Ukraine, Ukrainian Club of Agrarian Business, European Business Association, CEO Club Ukraine. We will be able to build such relations absolutely openly, honestly and transparently”, – the head of Astarta is convinced.
“Astarta is a vertically integrated agro-industrial holding operating in eight regions of Ukraine. It includes six sugar factories, agricultural farms with a land bank of 220 thousand hectares and dairy farms with 22 thousand cattle, oil extraction plant in Globino (Poltava region), seven elevators and biogas complex.
In the first half of 2023, Astarta’s revenue from sales of key products increased by 64.8% year-on-year to UAH 10.72 bln. The main contribution was made by sales of sugar – UAH 3.27 bln, which increased by 75.5%, corn – UAH 2.66 bln (+53.2%) and soybean meal – UAH 1.96 bln (+84.5%).
The International Sugar Organization (ISO) has made its first forecast for the global sugar balance for the 2023/2024 season (October to September).
According to the review, published on Thursday, the new season on the world sugar market will be in deficit.
Production is projected at 174.839 million tons compared to 174.024 million tons in 2022/2023, while global consumption is projected at 176.957 million tons compared to 176.531 million tons, respectively.
Thus, the deficit of sugar on the world market in the coming season will amount to 2.118 million tons.
Agro-industrial holding Astarta, the largest sugar producer in Ukraine, in April-June 2023 increased revenue from sales of key products by 68.3% compared to the same period last year – up to UAH 4.7 billion, according to the data published by it on the Warsaw Stock Exchange.
According to them, sugar sales increased by 9.2% year-on-year in the second quarter of this year to 68.9 thousand tons, while its average selling price increased by 40.6% to UAH 28.16 thousand per ton.
Milk sales in the second quarter of 2023 increased by 20.9% to 28.4 thousand tons, soybean oil – by 50.7% to 12.3 thousand tons, soybean meal – by 92% to 58.9 thousand tons.
Corn sales jumped 80.5% to 58.8 thousand tons, wheat sales jumped 95.6% to 5.9 thousand tons, and sunflower seed sales jumped 2.9 times to 28.6 thousand tons.
Agroholding specified that such an increase in sales in physical terms allowed to compensate for lower prices for most types of products. In particular, soybean oil fell in price by 28.8% to UAH 33.06 thousand/ton, wheat – by 26.8% to UAH 4.20 thousand/ton, sunflower seeds – by 21.5% to UAH 13.26 thousand/ton, corn – by 4.6% to UAH 6.85 thousand/ton.
Only soybean meal – by 33.6%, up to UAH 19.98 thousand/ton and milk – by 6.0%, up to UAH 13.09 thousand/ton.
Thus, sales of sugar in the second quarter increased by 53.6% to UAH 1 billion 938.8 million, wheat – by 24.8% to UAH 43.1 million, corn – by 72.2% to UAH 402.8 million, and sunflower seeds – by 72.2% to UAH 1 billion 938.8 million, sunflower seeds – by almost 2.3 times, to UAH 379.4 mln, soybean oil – by 11.8%, to UAH 405.1 mln, soybean meal – by almost 2.6 times, to UAH 1 billion 176.8 mln and milk – by 28.1%, to UAH 371.6 mln.
Overall, in the first half of the year, Astarta’s revenue from the sale of key products increased by 64.8% to UAH 10.72 billion compared to the same period last year, according to data published by the Warsaw Stock Exchange.
The main contribution was made by sales of sugar – UAH 3.27 billion, up 75.5%, corn – UAH 2.66 billion (+53.2%) and soybean meal – UAH 1.96 billion (+84.5%).
“Astarta is a vertically integrated agro-industrial holding operating in eight regions of Ukraine. It includes six sugar factories, agro-farms with a land bank of 220 thousand hectares and dairy farms with 22 thousand cattle, an oil extraction plant in Globino (Poltava region), seven elevators and a biogas complex. In this marketing year, the company sowed 201 thousand hectares, which is 40% more than last year.
Agropromholding earned EUR16.13 mln of net profit in the first quarter of 2023, which is 6.2 times more than in the first quarter of 2022. Its revenue grew by 37.1% to EUR163.55m, while EBITDA increased by 63.5% to EUR37.91m.
In hryvnia terms, Astarta increased its net profit 7.5 times to UAH 632.59m in the first quarter of this year, while revenue grew 66.6% to UAH 6bn 415.09m.
The Cabinet of Ministers has resumed sugar exports to Romania and set a quota for the supply of this product in the amount of 20,000 tonnes until September 15.
As the representative of the Cabinet of Ministers in the Verkhovna Rada, Taras Melnychuk, reported on his Telegram channel, the decision to amend the volume of quotas for goods which export is subject to licensing, approved by government resolution No. 1466 dated December 27, 2022 “On approval of the lists of goods, the export and import of which is subject to licensing and quotas for 2023” adopted at a government meeting on Friday.
According to the report, applications for obtaining licenses will be considered in the manner established by the Ministry of Economy, and the issuance of licenses – based on applications for obtaining licenses to export such goods to Romania and approvals by the Ministry of Agrarian Policy and Food.
Licenses will be issued within one day without the involvement of a subject of foreign economic activity as part of the interagency exchange of information.
Ukrainian exporters have already used almost 100% of the sugar export potential that was built into the forecast balance for the 2022/2023 marketing year, so to avoid a shortage of this product in the summer and autumn period, the government has limited its exports for the period from June 5 to September 15, the press service of the Economy Ministry said.
“Consumption of sugar grows in Ukraine in summer, so to avoid a shortage and price rises on the domestic market during this period, the government temporarily stops export quotas for this product,” the ministry said on its website on Thursday.
According to the State Customs Service, at the end of last week Ukraine exported more than 350 thousand tons of sugar and sugar products, which amounts to 95% of the forecast exports for 2022/2023 marketing year (MY).
As noted in the Ministry of Economy, the supply of the domestic market in 2022/2023 MY, taking into account the production of 1285 thousand tons of sugar and transitional residues, according to expert estimates, is 1776 thousand tons. To meet the needs of the domestic market in 2022/2023 yr Ukraine needs 1010 thousand tons. Export of sugar during the same period is expected at the level of 370 thousand tons.
As reported, the Cabinet of Ministers at its meeting on May 30 adopted a decree banning the export of sugar for the period from June 5 to September 15 this year.
The Cabinet of Ministers of Ukraine included sugar (trade item according to UKTVED 1701) to the list of goods, export of which is subject to licensing for the period from June 5 to September 15, 2023.
According to the representative of the Cabinet of Ministers in the Verkhovna Rada Taras Melnychuk in Telegram, the relevant decision was taken at a government meeting on Tuesday.
“Amended Annexes 1 and 5 to the resolution of the Cabinet of Ministers of 27.12.2022 N 1466 “On approval of the lists of goods, exports and imports of which are subject to licensing and quotas for 2023”. Sugar has been included in Appendix 1 “Quotas for the goods subject to export licensing” of the decree ¹ 1466 with a volume of quota of 0 tons and a licensing period from June 5 to September 15, 2023,” he wrote.
At the same time, sugar is excluded from Annex 5 of the same decree “The list of goods, the export of which is subject to licensing.
