IKAR in Mass and Industry Media

Russia seen needing sugar storage investment

Reuters

MOSCOW, March 2 (Reuters) - Russia requires new investments in sugar storage capacity to prevent wastage of beets as the country moves toward self-sufficiency in sugar, an industry expert said.

Sergei Gudoshnikov, a senior economist at the International Sugar Organization (ISO), told a conference on Thursday that Russia could not yet claim a regular place on world export markets since its record 2011/12 harvest of 5 million tonnes was largely due to unusually favourable weather.

Total output could have been as much as 10 percent higher, but part of Russia's sugar beet harvest was wasted this year because of poor infrastructure, a lesson that will not go unheeded by producers, who are committing investments to transport and storage, industry leaders said.

"We had to store in the field and the sugar suffered from frost, which is the worst thing for storage," Andrei Bodin, head of the Sugar Producers' Union, told the conference.

Russian sugar producers have made huge strides in output and quality over the past decade, but this year's big harvest showed the industry is about to start bumping up against capacity constraints.

Gudoshnikov said, "Russia's potential for the next 5-6 years is 5.5 million tonnes. I am not saying the next crop will be 5.5 million tonnes. I am not saying it will be five."

Investments are likely to focus on infrastructure to make the most out of each sugar beet harvest regardless of potential for exports.

Gudoshnikov saw two potential targets for investment: storage facilities for sugar beet, or new refining capacity to ensure processing of sugar beet before storage became an issue, depending on economics.

The choice is likely to come down in favour of storage, Bodin said.

Russia, once the world's biggest raw sugar importer, has re-emerged as an exporter of home-grown beet sugar, and could ship up to 250,000 tonnes to world markets in the 2011/12 season, industry leaders said.

The Institute for Agricultural Market Studies estimated 180,000 tonnes had already been exported by the end of February.

One reason Russia has exported as much as it has this season is that a lack of storage has forced refiners to process as much sugar beet as they can handle as quickly as possible. The season could be extended through investment.

05.03.12

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