Sugar production is one of the leading branches of agro-industrial complex in Ukraine and unites manufacturers of feedstock resources and final products manufacturers that are striving to achieve the common goal. The final product of the branch is sugar and its by-products – molasses and presscake.
The most valuable by-product of sugar production – molasses – is in high demand both on the domestic and on the foreign market. It is used to manufacture spirits, citric acid, yeast and a range of other products. Thus, on the one hand, the situation on molasses market in Ukraine is determined by the specific characteristics of sugar products, and on the other – it depends on demand from domestic consumers and exporters as well as on the global market trends.
In the recent years, a stable trend toward a decrease of the share of sugar production from sugar beets has been observed. Principal sugar beet production and processing facilities are centered in Europe, USA and China.
In Ukraine, over the years of its independence, areas under sugar beet decreased significantly and its production reduced more than 2.5 times and amounted to 17.1 mln t in 2007. In view of this, the 2008 forecasts envisage further decrease which will lead to further growth of deficit of feedstock resources for processing companies.
As a result, takeover of small sugar plants by larger sugar groups that have opportunities for growing sugar beet independently will continue. Inadequacy of feedstock resources and the need to modernize production facilities will facilitate preservation and strengthening of the role of sugar holdings.
Higher efficiency of growing sugar beets is possible provided it is accompanied by improved territorial localization of seeds in the most favorable soil and climate conditions in Ukraine, introduction of progressive technologies and material incentives for agricultural goods manufacturers aimed to increase productivity and sugar content in root crops.
In order to stabilize the situation in sugar branch measures of governmental regulation were taken. Since 2000, the mechanism of production quotas has been used. Pursuant to the Law of Ukraine “On State Regulation of Production and Sale of Sugar”, production quotas are established for each marketing year in order to provide for enough sugar beet crop acreage to provide plants with feedstock.
The main factors that determine the volumes of sugar production in Ukraine and, consequently, molasses production, are the governmental regulation of the sugar market, weather and climate conditions, availability of reliable feedstock resources, competitiveness and the level of development of sales markets and some other.
In 2007, according to preliminary information, Ukrainian sugar plants received approximately 742.6 t beet mass. When compare to the previous season, the production volumes decreased by 16.5%, yet they are still higher than in 2005 – by 18.3%.
Ukrainian market capacity of the beet mass market in 2006, including exports and imports, amounted to about 750, 000. In 2007, due to a reduction of sugar processing volumes, its supply on the domestic market was approximately 550, 000 t.
The principal consumers of molasses on Ukrainian market are manufacturers of spirits for alcohol beverages industry. Production of ethanol that is used in engine fuels is still at an initial stage of its development in Ukraine. Bioethanol production will make it possible to load production capacities of Ukrainian distilleries, only 40% of which are currently used. This will consequently lead to an increase of demand for molasses that is used as feedstock.
Foreign trade in molasses is determined by a general level of development and situation in the branch in general as well as active interest both from the domestic market players and from foreign traders.
In general, demand for molasses in the global market is constantly growing, which is explained mainly by development of programs involving alternative sources of energy. In this regard, Ukraine has significant potential that has recently not been used …
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