Russian Economic Development and Trade Ministry announced yesterday, September 15, 2005, it starts probing into increased import of Belarus sugar to Russia. For Belarus sugar, the investigation may result in duty of $149 a ton, while the sugar market of Russia may see the 10-percent increase in prices.
The size of Russia’s market of sugar is between 5 million tons and 5.5 million tons on year (around $3 billion). Of that amount, sugar beet accounted for 2.25 million tons in 2004, import of raw sugar – 2.6 million tons. The remaining 623,000 tons of sugar were delivered as ready-made product, including 80 percent from Belarus.
It was the Union of Sugar Producers of Russia that initiated investigation. Prime cost of raw sugar is over $500 a ton now, while Belarus sugar enters the market at $480. The Union blames such low prices on Belarus’ government, to be more precise, on unjustified subsidies provided by it to sugar producers. To make the market steady, Russia’s sugar operators addressed the Economic Development and Trade Ministry in mid-summer, calling for investigation and introduction of the compensatory duty of $149 a ton for import of Belarus sugar. In the Union of Sugar Producers, they are well aware this action will fuel the prices from today’s $480 to between $530 and $540 a ton.
The actual difficulty lies in the intergovernment agreement made between Russia and Belarus, whereby the sugar delivered from Belarus to Russia is exempt from the import duty. This provision applies to raw sugar exclusively, Belarus, however, produced only 300,000 tons of sugar last year but imported 423,000 tons to Russia.