Ukraine’s sugar production will collapse to its lowest level of post-Soviet times, as loss of land to the war, and “sub-optimal growing conditions”, accelerate a decline in the popularity of growing beet.

Sugar output will tumble by 23% year on year to 1.09m tonnes in 2022-23, as starts in October, the US Department of Agriculture’s Kiev bureau said.

That would represent the lowest production since Soviet times, in the latter stages of which Ukraine produced more than 5m tonnes of the sweetener a year, of which most was exported – much to Russia.

The extent of the decline reflects the disruption of the Ukraine war accentuating a long-term structural decline in the country’s sugar sector, amid shrinking domestic consumption, and with other crops such as corn and sunflowers providing farmers with better returns.

‘Unexploded munitions’

Indeed, sugar beet area, which stood at 1.5m hectares in the mid-1990s, will fall by 19.4% year on year to 183,000 hectares for 2022, on a planted basis, the bureau said.

“At least some of the sugar beet production areas might not be good for planting for 2022-23 due to the current or past military activities, including unexploded munitions, minefields etc,” the bureau said.

“There are reported damages on farms that have prevented farmers from normal operations in the regions that have become battlegrounds.”

“The forecasted decrease of production area will predominantly be the result of the Russian military invasion in Ukraine, as sugar beet growers (especially small and medium farmers) might be unsure about [the] ability of processing facilities to purchase their crop.”

‘Negative profitability’

However, the bureau also noted that satellite data suggested “sub-optimal growing conditions in growing regions before and during the period when sugar beets are being planted”.

This when the popularity of beet has been suffering anyway thanks to its “negative profitability compared with other crops”, with the bureau estimating 2021 as a fourth successive year of losses, continuing a trend which “effectively facilitates [the] continued exodus of small and medium farmers from sugar beet production”.

“Poor economics of sugar beet production makes it a marginal crop compared to grains and oilseeds,” although economics are better for large producers, often linked to processors, which can achieve economies of scale and afford higher-quality inputs such as seed.

‘Pillars of sugar intake’

Processors themselves face the challenge of a shrinking sugar market in Ukraine, where even before the war “consumption in Ukraine has been slowly decreasing due to a declining population as well as food processors’ ability to substitute sugar with high-intensity sweeteners.

“Ukrainian consumers’ consumption of condensed milk with sugar is declining as well. Likewise, fewer consumers are making homemade jams out of fresh fruits.

“Condensed milk with sugar and homemade jams… were two of the traditional pillars of sugar intake in Ukraine.”

The bureau estimated consumption this season down 6.9% at 1.12m tonnes, reflecting the exodus of 5.6m Ukrainians, equivalent to 13% of the population, thanks to the war.

In 2022-23, consumption will recover somewhat to 1.17m tonnes, although this would remain well below the 1990-91 high of 2.92m tonnes.