“There is considerable tension in the sugar market. Prices are falling practically before our eyes, the reason is the falling world price of sugar on the one hand, and the great pressure of cheap sugar from Ukraine on the other,” describes the current situation on the sugar market, Tereos TTD group spokesperson Jakub Hradiský.
According to him, sugar production prices go back three to four years. This is good news for consumers as at the same time sugar counter prices are falling. For example, from January to September, according to data from the Czech Statistical Office, the price of granulated sugar in stores fell from CZK 22.91 to CZK 20.40 per kilogram. It’s the lowest price in two years.
Imports increased twentyfold
“Sugar imports from Ukraine have resulted in a significant drop in prices in the region of Central and Eastern Europe, up to 40 percent compared to the same period last year,” says Hradiský.
Unlike consumers, however, cheap sugar makes producers nervous, for whom all costs have risen in recent years, and above all payments for energy, which is very demanding for sugar production. Sugar mills are now in the middle of the most hectic part of the year, when they produce sugar as part of the so-called sugar campaign from September to the beginning of February and, in addition, conclude important business contracts.
According to Eurostat data, sugar imports from Ukraine are growing significantly. In 2021, approximately 14,800 tons of sugar flowed into the countries of the European Union from Ukraine, and a year later over 148,000 tons of sugar, i.e. ten times more. Last year, imports from the war-torn country rose again to nearly half a million tonnes of sugar, 23 times the 2016-2021 average.
This year, the Czech Republic imported 38,000 tons of sugar from Ukraine, which corresponds to more than a tenth of domestic consumption. At the same time, there is a large amount of sugar from Poland on the market, where production is significantly supported.
However, based on the results of inspections by the State Agricultural and Food Inspection, it cannot be said that the sugar from Ukraine that reaches the Czech Republic is of poor quality or even dangerous.
“The State Agricultural and Food Inspection Service (SZPI) has so far taken a total of 12 samples of sugar originating from Ukraine for laboratory testing – all of them were evaluated as satisfactory,” said SZPI media communications officer Marek Bartík.
New markets
However, cheap competition forces Czech sugar factories to change their business strategy and look for opportunities elsewhere.
“In order to mitigate the losses, we are forced to look for all ways to mitigate the decline in the economic result, thanks to sugar imports from Ukraine we lost part of the market in Eastern Europe, therefore we will export part of the sugar,” said the head of marketing.
The sugar company is therefore trying to export more to third countries, as Ukrainian sugar reaches customers in countries where the company traditionally operates, such as Romania, Bulgaria and Hungary. He is currently looking for a replacement in Central African countries.
As a result, according to the company, this harms domestic producers not only on domestic markets, but also in exports. “The Czech Republic exports 220-250,000 tons of sugar annually, and Czech producers are currently lacking sales in these countries as a result of Ukrainian competition,” said the head of marketing.
According to the sugar factory, this price handicap is due to the stricter requirements placed on growers in the EU, but also to a large number of administrative and environmental requirements that producers have to meet - For example ESG, the Green Deal and expensive emission allowances. “With the current drop in prices, this situation in the industry is unsustainable in the long term and European production is becoming uncompetitive,” he said.
The company expects that this year’s financial result will deteriorate significantly because of this. The last one was again a record. Sales in the financial year ending on March 31, 2024 increased year-on-year from 9.2 billion to 10.2 billion crowns and net profit from 925 million to 1.2 billion crowns.
Tereos TTD is the largest sugar company in the Czech Republic. The company, controlled by the French group Tereos, produces sugar in two plants in Dobrovica and Český Meziříčí and has a packaging center in Mělník. The company annually produces approximately half of the sugar in the Czech Republic and exports significantly. The company also produces alcohol. In addition to the mentioned plants in the Chrudim, Kojetín and Kolín distilleries.
The second largest domestic sugar producer is Moravskoslezské cukrovary, belonging to the Austrian concern Agrana. In addition to them, three other smaller players operate in the country: Cukrovar Vrbátky, Cukrovar Prosenice and Litovelská cukrovarna.
Tereos TTD will produce around 350,000 tons of sugar in the country in the current campaign, i.e. very similar to last year. According to the first estimates, 590 thousand tons of sugar will be produced in the entire Czech Republic this year. Record areas of sugar beet are harvested. Year-on-year, they will grow from 61.5 thousand to more than 68 thousand hectares.
About the jump in the price of sugar
“There is enough beet for mass, but there is little sugar in it – only 16 percent, which is our worst result in the last ten years,” said Hradiský. The culprit is the drought and heat at the end of August, the development of leaf diseases and the flooding of some fields in Moravia.
Tereos TTD announced an investment plan of 700 million crowns last year. It includes the construction of a new diffusion tower in the sugar factory in Dobrovice, the modernization of the beet washer, a new sugar silo with a capacity of 50 thousand tons and also the gasification of the boiler room in the plant in Český Meziříčí.
Sure! Let’s dive into the sweet chaos of the sugar market, shall we? Grab your cups of coffee – or a spoonful of sugar, if you must – because we’re about to stir up some lively commentary!
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<title>The Sweet Conundrum: A Cheeky Take on the Sugar Market Madness</title>
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<h1>The Sweet Conundrum: A Cheeky Take on the Sugar Market Madness</h1>
<p>So, the sugar market is in a bit of a sticky situation, isn’t it? Prices are plummeting faster than a clumsy waiter dropping a tray full of desserts! According to Jakub Hradiský from Tereos TTD, we ought to be grinning from ear to ear, benefiting from the “great pressure of cheap sugar from Ukraine.” It’s like a sugar rush – until you crash, of course.</p>
<h2>Prices Falling Like Gravity's Got a Grudge</h2>
<p>Consumers might be delighted as the price of granulated sugar in stores has slid from CZK 22.91 to a darling CZK 20.40 per kilogram! It’s the lowest price in two years – and folks, that’s not just a sweet deal, it’s practically a candy cane! But here’s the kicker: while we’re all hoarding our sugar for our morning coffees, the sugar producers are feeling more nervous than a cat in a room full of rocking chairs. With every other sweet tooth worldwide jumping on the cheap Ukrainian sugar, it’s jarring to see the locals sent into a tizzy.</p>
<h2>Imports Soaring Higher Than Candies in a Piñata</h2>
<p>The floodgates have opened – Ukrainian sugar imports have exploded twentyfold! In 2021, we imported a measly 14,800 tons of sugar, but last year that ballooned to nearly half a million tons! At this rate, we might as well start putting up Ukrainian sugar billboards or celebrating "Ukrainian Sugar Day." And goodness gracious, just how much sugar does one country need to export in a single go? It’s as if they’ve mistaken sugar for confetti!</p>
<h2>Quality Control: Not Just for Fine Wines</h2>
<p>Fear not, dear readers! The sugar is said to be top-notch, as verified by the State Agricultural and Food Inspection. All twelve samples taken were reported as satisfactory. Phew! Thank goodness it’s not like inspecting someone’s questionable home-cooked lasagna at a potluck. Eat away without fear of that dreaded "sugar touch!"</p>
<h2>Producers Looking for Sugar Alternatives</h2>
<p>Now, amid this comedy of sugar errors, Czech sugar companies are feeling the burn. Prices are dropping and they’re scrambling to adjust faster than I can say “glucose.” They’re considering exporting to third countries, running about like kids in a candy store, desperate to find new markets, pulling at any trick they can muster. Like a sugar-fueled pop quiz, these producers are under pressure to deliver results as they lose their grip on Eastern European markets.</p>
<h2>Problematic Prices and a Sweet Sorrow from Regulations</h2>
<p>It appears that the EU's sugar regulations, green deals, and environmental requirements are playing party pooper. It's all just too much for our dear producers. Can you imagine producing sugar while adhering to a laundry list of rules? That’s worse than my last trip to IKEA! They’ve projected a significant drop in this year’s financial results, which is just devastating – kind of like finding out your favorite candy shop has gone out of business.</p>
<h2>A Future Full of Promises and Droughts</h2>
<p>Despite the ongoing dramas, Tereos TTD aims to produce approximately 350,000 tons of sugar this campaign – commendable! But with yields down to 16 percent sugar content (thanks a lot, drought), it’s akin to discovering that there’s barely enough sugar for your tea, not to mention the laborious tasks of harvesting more areas of sugar beets.</p>
<h2>Final Sugar Rush: Investments Aplenty</h2>
<p>Tereos has put forth an investment plan of 700 million crowns to modernize its facilities, which feels optimistic amid this “sweet despair.” It’s not just sugar; it’s a multifaceted ballet of market forces, imports, and production woes. As we wrap up this sugary saga, one thing is clear: we must keep our eyes peeled – for who knows what curveball (or candy) the market will throw next?</p>
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</html>There you have it, a cheeky exploration of the sweet, sticky mess that is today’s sugar market! From price drops to the pressures faced by producers, this commentary combines a sharp wit with the fascinating intricacies of the sugar economy. Only time will tell how this sugary saga unfolds!
Tereos TTD group’s spokesperson, Jakub Hradiský, characterizes the current sugar market landscape as being fraught with tension, stating that “Prices are falling practically before our eyes.” He attributes this decline to two significant factors: the plummeting global sugar prices and the influx of inexpensive sugar imports from Ukraine exerting immense pressure on the market.
According to Hradiský, the production costs of sugar reflect conditions that date back three to four years, providing a silver lining for consumers, as the retail prices of sugar are concurrently decreasing. Notably, data from the Czech Statistical Office highlights that from January to September, the price of granulated sugar has dropped from CZK 22.91 to CZK 20.40 per kilogram, marking the lowest price in two years.
Imports increased twentyfold
Hradiský elaborates on the impact of Ukrainian sugar imports, indicating that these have led to a staggering decline in sugar prices in Central and Eastern Europe, with reductions of up to 40 percent compared to the previous year.
However, these low prices are a source of anxiety for sugar producers, who have faced escalating costs in recent years, particularly due to soaring energy expenses, which are critical to sugar production. As sugar mills enter the bustling seasonal phase known as the sugar campaign, running from September to early February, they are also engaged in crucial business negotiations.
The trend of increasing sugar imports from Ukraine is notable, with Eurostat data revealing a massive jump from 14,800 tons in 2021 to more than 148,000 tons in 2022 — a tenfold increase. Last year, with the war in Ukraine exacerbating production, imports soared to nearly half a million tons, a staggering 23 times the average pre-war levels from 2016 to 2021.
This year alone, the Czech Republic has imported 38,000 tons of sugar from Ukraine, accounting for over ten percent of its domestic consumption. Compounding this situation is the presence of abundant sugar supplies from Poland, where production enjoys significant governmental support.
Inspections conducted by the State Agricultural and Food Inspection indicate that the sugar imported from Ukraine meets quality standards, dispelling concerns regarding its safety. “The State Agricultural and Food Inspection Service (SZPI) has thoroughly tested 12 samples of Ukrainian sugar, all of which were deemed satisfactory,” stated SZPI media representative Marek Bartík.
New markets
The influx of competitively priced sugar is prompting Czech sugar factories to revise their business strategies and explore alternative markets in response to this pressure.
To counterbalance their losses, companies are actively seeking to offset the decline in profitability, as Ukrainian sugar imports have eroded their market share in Eastern Europe, leading to the decision to export sugar to other regions.
The company has pivoted towards exporting sugar to third countries, particularly where Ukrainian sugar also finds its way, including Romania, Bulgaria, and Hungary, while also seeking new opportunities in Central African nations.
This competitive landscape poses challenges not just within domestic markets but also dampens the ability to export effectively. “The Czech Republic typically exports 220,000 to 250,000 tons of sugar annually, yet current conditions have left producers struggling to find sales channels due to the influx of Ukrainian sugar,” noted the marketing head.
The competitive disadvantage faced by local producers stems from stringent European Union regulations and a myriad of administrative and environmental obligations that must be adhered to — including ESG standards, the Green Deal, and the costs associated with emission allowances. “With this significant price drop, the viability of the industry is increasingly untenable, rendering European sugar production less competitive,” he remarked.
Amidst these challenges, the company predicts a sharp decline in this year’s financial performance. The previous financial year marked a record increase, with sales rising from CZK 9.2 billion to CZK 10.2 billion, and net profit climbing from CZK 925 million to CZK 1.2 billion.
Tereos TTD stands as the largest sugar manufacturer in the Czech Republic, governed by the French group Tereos. The company operates two production facilities in Dobrovica and Český Meziříčí, alongside a packaging center in Mělník. Annually, Tereos TTD is responsible for producing about half of the nation’s sugar output while also having a significant export presence. The company diversifies its operations to include alcohol production, utilizing distilleries located in Chrudim, Kojetín, and Kolín.
The second largest sugar entity, Moravskoslezské cukrovary, is part of the Austrian conglomerate Agrana, with three additional smaller producers also active in the market: Cukrovar Vrbátky, Cukrovar Prosenice, and Litovelská cukrovarna.
In terms of output, Tereos TTD estimates it will produce approximately 350,000 tons of sugar in the current campaign, closely mirroring last year’s production levels. Initial projections suggest that total sugar production in the Czech Republic will reach around 590,000 tons this year, bolstered by record sugar beet cultivation covering over 68,000 hectares, an increase from last year’s 61,500 hectares.
About the jump in the price of sugar
Hradiský cautions, however, that while there is a sufficient beet mass for processing, the sugar yield is low, at only 16 percent—a concerning statistic representing the poorest performance in a decade. Adverse weather conditions, including drought and excessive heat at the end of August, along with plant diseases and flooding in certain regions of Moravia, have been cited as contributing factors to this decline.
In a bid to improve future prospects, Tereos TTD unveiled a substantial investment plan amounting to 700 million crowns last year. This ambitious initiative encompasses the construction of an advanced diffusion tower at the Dobrovice plant, the modernization of sugar beet washing facilities, the addition of a new sugar silo with a capacity of 50,000 tons, and the implementation of a gasification system for the boiler room at the Český Meziříčí facility.
Ohol production and bioethanol, allowing it to adapt to changing market conditions while trying to remain competitive.
Despite the hurdles, Tereos is investing in modernization efforts, including a substantial 700 million crown plan to upgrade its production facilities, reflecting a commitment to improving efficiency and sustainability in sugar production. However, the backdrop of rising energy costs and challenging EU regulations presents ongoing obstacles in their quest to secure a foothold in the sugar market amid fierce competition from Ukrainian imports.
As the sugar industry grapples with these significant changes, it paints a picture of a landscape in flux, one where producers must innovate and pivot swiftly. The narrative intertwined with competition, price fluctuations, and regulatory intricacies is sure to keep both industry insiders and consumers on their toes. Only time will reveal how these dynamics will play out and whether Czech producers can regain their footing in a market influenced heavily by external forces.
In the meantime, for consumers, the dip in sugar prices might provide some sweet relief at checkout—turning potential challenges faced by producers into a sugary benefit at the local grocery store. Nevertheless, vigilance will be necessary, as the unfolding saga in the sugar market hints at more twists and turns ahead!
