Sugar scenario in CIS countries: on the way to self-sufficiency Andrey Bodin Eurasian Sugar Association
Commonwealth of Independent States (CIS) consists of 11 countries CIS Moldova Belarus Population 277 mln people Ukraine Russia Area 20,99 mln km² Azerbaijan Armenia Turkmenistan EAEU Kazakhstan Uzbekistan Kyrgyzstan Sugar consumption 9.27 mln t Sugar production 9.3 mln t - beet 8.1 mln t - raw 1.18 mln t Tajikistan 2
Customs regulations in CIS countries differ Countries Sugar sufficiency Mechanism of customs tariff regulation Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia Ukraine Moldova Azerbaijan, Tajikistan, Turkmenistan, Uzbekistan High level of self-sufficiency High level of self-sufficiency High level of self-sufficiency Low level of selfsufficiency, dependence on import Common customs tariff, the removal of sugar from free trade regime High customs duties on sugar and raw sugar, the removal of sugar from free trade regime Customs duties on sugar and raw sugar, special protective measures Low custom duties 3
Eurasian Economic Union (EAEU) was established in 2010 The biggest influence to the cis sugar market have the sugar producers from Eurasian economic union: Russia, Belarus, Kazakhstan, Kyrgyzstan Armenia 4
77% of CIS beet sugar will be produced by EAEU countries in season 2016/17 EAEU Belarus Population 183 mln people Russia Area Sugar consumption 20.22 mln km² 6.31 mln t Armenia Kazakhstan Sugar production 6.5 mln t - beet 6.35 mln t - raw 0.15 mln t Kyrgyzstan 5
DAD Customs regulations in EAEU countries Sugar policy in CU countries White sugar USD340/mt Import Duty Raw sugar USD140-250/mt Exemptions: Kazakhstan: import duty for raw sugar - 0% till 2019, import duty for white sugar 0%, bonded warehouses till 2017; Armenia: since 1.1.2015 import duty for raw sugar - 0% till 2025, import duty for white sugar (4,000 mt) 10% for 2015-2016; Kyrgyzstan: since 2015 for 5 years the privilege to import up to 100 thousand tons of raw sugar without duty 6
Thousand ha In EAEU countries beet sowing area has increased by 12% since 2013 1600 1400 1200 1000 800 1273 97 1409 101 1246 98 1007 1013 101 104 1135 102 1231 98 11 12 600 400 1160 1292 1143 906 919 1022 1110 200 0 2010 2011 2012 2013 2014 2015 2016 Russia Belarus Kazakhstan Kyrgyzstan 7
Thousand tons Sugar beet areas in EAEU may increase Up to 10% in 2020 1600 1400 1200 1000 1273 97 1409 101 1246 98 1007 1013 101 104 1135 102 1231 98 12 11 1350 110 20 20 800 600 400 1160 1292 1143 906 919 1022 1110 10% 1200 200 0 2010 2011 2012 2013 2014 2015 2016 2020 Russia Belarus Kazakhstan Kyrgyzstan 8
Sugar yield, tons/ha Sugar yield may reach average 6,5 tons per 1 ha by 2020 in EAEU countries 8.0 7.0 6.0 5.0 4.0 3.0 2.0 5.5 4.3 3.3 2.6 2.6 2.2 2.3 2.1 2.1 2.2 4.9 5.0 4.6 2.9 6 6.5 6.0 5.7 5.5 4.2 1.0 0.0 Kazakhstan Kyrgyzstan Russia Belarus 2010 2012 2014 2016 2020 9
Increase in sugar yield per 1 ha to be achieved by: Use of new hybrids of sugar beet seeds; Improvements in agrotechnology; Further modernization of sugar factories 10
Thousand tons of beet per day Sugar factory capacities increased by 20% since 2010 600 500 400 300 361 22.5 27.5 378 522 27 48 390 400 410 415 421 28 29.6 30.6 32.7 33 33.4 22.5 22.5 22.5 22.5 22.5 22.5 200 100 305 322 332 341 349 354 360 437 0 2010 2011 2012 2013 2014 2015 2016 2020 (forecast) Russia Belarus Kazakhstan Kyrgyzstan 11
Thousand tons of beet per day Sugar factories capacities in EAEU are expected to increase by 20% 600 500 400 300 361 22.5 27.5 522 27 48 378 390 400 410 415 421 28 29.6 30.6 32.7 33 33.4 22.5 22.5 22.5 22.5 22.5 22.5 200 305 322 332 341 349 354 360 20% 437 100 0 2010 2011 2012 2013 2014 2015 2016 2020 (forecast) Russia Belarus Kazakhstan Kyrgyzstan 12
Thousand tons Beet sugar production increased by 72% within 6 years 7000 6000 5000 6350 consumption 5758 5437 5266 5046 5123 4000 3659 3000 2000 1000 0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 (forecast) Russia Kazakhstan Kyrgyzstan Belarus 13
Thousand tons More than 500 thousand tons of sugar EAEU countries will have to export by 2020 8000 7000 6000 5000 4000 3000 consumption 5266 5437 3659 5046 Potential surplus 500 th. tons 5123 5758 6350 9% 7000 2000 1000 0 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 (forecast) 2020 (forecast) Russia Kazakhstan Kyrgyzstan Belarus 14
% of consumption level Historically high sugar stocks in EAEU countries expected in 2016/17 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 70-80 % of consumption level 0 aug sep oct nov dec jan feb mar apr may jun jul 2014/15 2015/16 2016/17 15
Thousand tons As a result decrease in raw sugar and white sugar import 900 827 800 700 240 Armenia 600 500 27 Belarus Kazakhstan No import sugar needed 400 300 Kyrgyzstan 300 200 100 0 180 100 80 50 2015/16 (raw sugar) 150 2016/17 (raw sugar) Russia 210 50 40 120 2015/16 (white sugar) 0 2016/17 (white sugar) 16
USD/t (excl. VAT) August Factors influencing local sugar price trends September October November December January February March April May June July 690 670 650 630 610 590 570 550 530 510 490 470 450 430 2015/16 Sugar beet processing Sowing campaign 17
USD/t (excl. VAT) This year domestic sugar prices depend on the world white sugar market August September October November December January February March April May June July 690 670 650 630 610 590 570 550 530 510 490 470 450 430 2015/16 2016/17 Contract 5 (White Sugar) 100$ Export price support 18
EAEU white sugar is competitive for export this year Belarus Kyrgyzstan White Sugar (London #5) Kazakhstan India Armenia Russia Raw Sugar (NY #11) 640 630 590 570 546 540 500 488 19
Ukrainian sugar remains competitive in CIS countries in 2016/17 Ukraine Moldova 292 th. ha 1850 th. tons 1600 th. tons 250 th. tons 430 $/t Sowing area Production forecast Annual consumption Surplus Current price 24,2 th. ha 100 th. tons 80 th. tons 20 th. tons 590 $/t 20
Four CIS countries are net sugar c Overall sugar, th. t Sugar consumption, th. t White sugar prices Demand, th. t Azerbaijan 330 250 80 Tajikistan 0 120 120 Turkmenistan 30 100 70 Uzbekistan 580 550 30 Azerbaijan 660 Tajikistan 690 Turkmenistan 520 Uzbekistan 640 USD/Tonne 21
Sugar by-products play important role in economics of sugar factories Total export revenue in 2015 exceeded 145 mln USD Beet pulp pellets (BPP) 1,0 mln tons 110 mln USD Molasses, 440 thousand tons 35 mln USD 22
406 387 2300 2200 1920 1500 1420 1065 1030 508 3100 2872 596 4100 734 965 1372 1300 1253 1585 10900 EAEU is net exporter of sugar by-products BPP, thousand tones Beet molasses, thousand tones 1800 1600 12000 1400 10000 1200 1000 8000 800 6000 600 4000 400 200 0 2000 0 23
THANK YOU! Eurasian Sugar Association Andrey Bodin Executive Director 8/1 bld. 1, Skatertny Lane, Moscow, 121069, Russia tel.: +7 (495) 690 22 01, fax: +7 (495) 690 22 14 e-mail: sugar.cu@gmail.com