Photo from UNIAN
The Ukrainian government plans to raise the minimum purchase prices of sugar in the 2016-2017 marketing year (MY, September 2016 through August 2017) by 41% from the current levels, to UAH 9,078.87 per tonne (VAT excluded), the Agrarian Policy and Food Ministry's press service reported.
A relevant decision is stipulated in a draft resolution approved on January 20 to introduce state regulation of sugar and sugar beet production during the period from September 1, 2016 to September 1, 2017.
The government also intends to reduce a quota for sugar supplies onto the domestic market (quota 'A') by 3% to 1.67 million tonnes and set a minimum sale price of sugar beets at UAH 616.99 per tonne as compared to the current price of UAH 445.87, according to the statement.
It is reported that the maximum size of the quota has been determined based on sugar consumption by the population (calculated at the rate of 38 kg per person annually), which is projected to amount to 1,620 million tonnes during the specified period, and other consumption at 50,000 tonnes.
The levels of the minimum prices for sugar beets and sugar within the "A" quota have been determined based on calculations of the Institute of Bioenergy Crops and Sugar Beet of the National Academy of Agricultural Sciences of Ukraine and the state scientific institution "Ukrainian Scientific Research Institute of Sugar Industry" on the basis of production costs and minimum profitability.
The press service notes that if a producer exceeds an allocated quota for sugar supplies onto the domestic market or sells it at a price lower than the minimum one, such a producer will be subject to a fine at a double price rate of the sugar, which has been sold in breach of the established order.
As UNIAN reported earlier, in August 2015, the government approved a draft law developed by the Agrarian Policy Ministry, which envisaged the elimination of the minimum price for sugar and sugar beets. The ministry stressed that the abolition of the provision would stimulate competition, which would create an incentive for sugar producers to reduce the cost of their products. As the result, consumers will be able to buy sugar at lower prices.
In the 2015-2016 MY, the Cabinet of Ministers raised the minimum purchase prices of sugar by 36.7% compared with the 2014-2015 MY to UAH 6,454.73 per tonne (excluding VAT). The minimum purchase price of sugar beets increased by 29.8% to UAH 445.87 per tonne. In addition, the government resolution envisages a reduction in a quota for sugar shipments onto the domestic market ('A' quota) in the current MY to 1.72 million tonnes from 1.811 million tonnes.