Five Russian sugar factories stopped work due to unprofitable production

Russian Five sugar factories stopped work due to unprofitable production In June 2019, the wholesale price of sugar fell to the lowest level in the last five years. According to Five Russian sugar factories stopped work due to unprofitable production
Pixabay.com In June 2019, the wholesale price of sugar fell to the lowest level in the last five years. According to “soyuzrossakhar”, drop in early summer is not typical for this industry: manufacturers are trying to compensate for storage costs and wholesale prices typically increase
Moscow-Live.ru / Budziszewski Nikolai

Five Russian sugar factories stopped work because of unprofitable production, according to the Union of Russian sugar producers (soyuzrossakhar of).

“In a production season 2020-2021 year will not work Meleuzovsky sugar factory in the Republic of Bashkortostan, Nurlatsky sugar factory in the Republic of Tatarstan, Tovarkovskiy sugar plant (Tula oblast), as well as one plant in the Krasnodar region. At the end of 2018 precrater work Sadovsky sugar factory in the Voronezh region. The main reason for the plant closures are the losses from sugar beet processing and subsequent sale of sugar”, – said the expert.

According to the analytical service, in this production season in 21 regions worked with 74 of the plant for processing of sugar beet with a total capacity of 382 thousand tons per day. Businesses that decided to close for this period was produced about 200 thousand tons, 22 thousand tons of pulp and 47 thousand tons of molasses. The total number of employees – about 1.5 thousand people.

As stated by the Chairman of the Union of sugar producers of Russia Andrey Bodin, quoted by “Vedomosti”, the average annual sugar prices for the last three years were at the level necessary to maintain the required level of profitability. According to him, even in season 2016/17 Russia increased its production so that it began to exceed consumption and the surplus of sugar needed to sell abroad. However, this coincided with the decline in world prices and to sell excess sugar failed, he began to build up in Russia, which led to the collapse of sugar prices in the domestic market.

as a result, prices dropped to historically low levels – 20 rubles. per 1 kg (more than 35 rubles. per 1 kg in 2016). The profitability of sugar companies fell to 3.3%, which is significantly below the average for all agricultural products.

According to bodeen, if the situation of the world and domestic prices for sugar will not change, you have to close other plants. Run only those enterprises, which have their own sugar beet production, due to which you can optimize costs.

“In this situation, it is necessary to improve production efficiency, reduce costs and to develop logistics. The provision could also be improved if farmers would reduce plantings of sugar beets,” – said the head of “soyuzrossakhar”.

In June 2019, the wholesale price of sugar fell to the lowest level in the last five years. According to “soyuzrossakhar”, drop in early summer is not typical for this industry: manufacturers are trying to compensate for storage costs and wholesale prices usually grow.

the Reason – the accumulated sugar stocks in Russia at the end of June. The surplus reached a record volume of 2.7 million tons, 200 thousand tons exceeded the previous year’s stocks and 700 thousand tons of stocks of 2016, which is considered the optimum ratio of sugar in the market and its inventory.

Manufacturers believe that product excess piling up due to good yields of sugar beets, as well as due to the fact that Uzbekistan is the second after Belarus the largest buyer of Russian sugar, imposed a 20 percent VAT on its imports. It is strongly influenced by the volumes sold to the Republic of sugar. As a result, the Union of sugar producers expect an even greater fall in prices in the 2019/20 agricultural year.

In November 2019, the Ministry of agriculture decided to reduce the sugar beet by 15% in 2020, and also plans to set additional quotas for the use of the seeds of the Russian production of this crop. Last year, according to the Ministry, beet crops took a 1.6% more space than the year before.