The closure of the European market for Ukrainian sugar could lead to a significant reduction in prices for domestic consumers. According to the data presented during the analytical briefing of the All-Ukrainian Agrarian Council (AAC ), selling prices for sugar in Ukraine have already fallen to 26.5-27.5 UAH/kg, reports Komersant ukrainskyi
“In August, Ukraine exported only 3-4 thousand tonnes of sugar, which is critically low compared to the 100 thousand tonnes exported two months ago. The Ukrainian sugar market is facing difficulties as we are now fully focused on domestic consumer demand,”
– said the analytical department PUSK, created within the UAC.
Sugar production in Ukraine is expected to increase, but exports to the European Union, which was a key market, will remain closed until the end of the year. This forces Ukrainian producers to look for new markets to sell their products.
“In the new season, Europe will also increase its sugar production, which will make it more difficult to sell Ukrainian products internationally. Objectively, by January 2025, Ukraine will either have to pay high export duties or wait for the quotas to be cancelled,”
– the UAC states.
Given these factors, experts predict that sugar prices will remain low in the new season.
“Given the instability in export markets and local surplus, domestic sugar prices are likely to remain under pressure,”
– the farmers conclude.
Thus, although the situation is challenging for sugar producers, it may turn out to be beneficial for Ukrainian consumers, who are likely to be able to buy sugar at lower prices.
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The preferential trade regime and its enemies
The decision to allow the free import of Ukrainian goods into the EU was made by the EU at the beginning of the full-scale Russian invasion as a gesture of support for the Ukrainian economy and in response to the Russian naval blockade of Ukrainian ports. During the two years of its operation, the simplified regime has gained a lot of opponents in the EU. In particular, the governments of Bulgaria, Poland, Hungary, Romania and Slovakia demanded that imports of Ukrainian products be restricted (later France joined this position). They claim that cheap agricultural products from Ukraine are swallowing up their markets.
Six major European farmers’ associations also protested strongly against Ukrainian products. Polish farmers have even staged a border blockade, not only with Ukraine but also with Germany.
Nevertheless, after a tough debate, the simplified trade regime with Ukraine was extended until 5 June 2025. However, at the request of these countries, it was severely restricted.
Thus, the provisions on duty-free trade were amended to include further “safeguards” to protect European producers.
In particular, the European Commission may apply any measures it deems necessary if imports from Ukraine cause “significant disturbances” on the EU market or the markets of one or more EU Member States. In such a case, the European Commission may launch an “emergency brake” for particularly sensitive agricultural products. This list includes the following products:
- poultry
- eggs
- sugar
- oats
- cereals
- corn;
- honey.
However, the European Commission has not only options but also responsibilities. If imports of these goods exceed the average import volumes recorded in the second half of 2021 and for the whole of 2022 and 2023, customs tariffs must be restored within 14 days.
Thus, the EU has effectively reintroduced import quotas for many Ukrainian goods, albeit at a rather high level.
This year, Ukrainian exporters exhausted their sugar quotas in six months. Since July, the EU has not only returned the quotas, but also reduced them by 2.5 times from 2025.