Russian Sugar Factories Struggle amid Declining Prices

Three sugar mills in Russia with the total capacity of 150,000 tons announced they will close in the period August 2020-July 2021 due to low sugar prices, Prime news agency writes citing the Chairman of the Board of Directors at the Russian Union of Sugar Producers (Soyuzrossakhar) Andrei Bodin.

This concerns Bashkiria’s Meleuzovsky mill (part of Prodimex farming group), the Nurlatsky mill in Tatarstan (owned by Agro-invest group) and the Tovarkovsky mill in the Tula Region (owned by Rosselkhoznadzor).

All three mills produced nearly 1 million tons of sugar beet in the 2019-2020 season, accounting for some 2% of this commodity countrywide, according to the industry group. The price level over the past three years has not permitted the plants to maintain a profitability level, Bodin notes.

During the 2016-2017 season, nationwide sugar production exceeded domestic consumption. Russia’s production growth coincided with the slump in global sugar prices, which became lower than the product cost in Russia. As a result, sugar was not sold out, leading to an excess, which crashed domestic prices.

Russia’s plants need to increase the efficiency of their production, reduce spending and develop logistics, while farmers should downsize sugar beet harvesting, Bodin explained.

On February 6, the Russian Union of Sugar Producers predicted that during this season, Russia’s sugar production would hit 7.7 million tons, a record high for the country.

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