A Bitter Issue: Can a Balance Be Found Between the Interests of Sugar Beet Growers and Processors?
21 January 16:34
РОЗБІР ВІД 
The Ukrainian government views the development of agricultural processing as one of its key priorities and considers last year’s introduction of export duties on soybeans and rapeseed, as well as the subsequent record-breaking results achieved by processors, to be a clear success.
But is everything so clear-cut in this area? Is it possible—and how—to balance the interests and capabilities of producers and processors?
The sugar production season is currently coming to a close in Ukraine. Sugar production in the 2025–2026 marketing year is expected to exceed 1.7 million tons. A total of 464,000 tons of sugar were exported, which is 38% less than in the previous year, when Ukraine set an industry record for exports. This is the result of the work of 27 sugar factories that operated in 2025. These figures are cited in a report by the National Association of Sugar Producers of Ukraine, “Ukrtsukor.” And there is no mention of those who directly grow sugar beets. This is not only because the association primarily represents the interests of sugar producers—that is, processors—but also because growers, who cultivate the raw materials for sugar production, do not have access to sugar exports. Although there are members of the Ukrainian parliament who propose granting such access to agricultural producers.
“In favor” of exports for agricultural producers
Last December, members of the parliamentary agricultural committee sent a letter to the prime minister regarding the need to improve the mechanism for exporting sugar produced in Ukraine. MP Dmytro Solomchuk, who announced this, explained the parliamentary initiative as follows:
“Today, only processors (sugar factories) effectively have the right to export sugar, although Brussels did not impose such a condition during negotiations on expanding export opportunities for agricultural products. It turns out that direct agricultural producers of sugar beets, who invest significantly in the production of raw materials and the final product itself, do not have such direct access.”
The parliamentarian also outlined the positive consequences of such a decision. According to him, granting sugar beet producers direct or simplified access to sugar exports (possibly through a quota mechanism) will, in particular, contribute to creating a competitive environment between producers and processors and, accordingly, stimulate the overall efficiency of the industry. Furthermore, the ability to export directly will provide producers with financial stability, allowing them to invest in modernization, new technologies, and the expansion of cultivated areas. He also mentioned the creation of stable jobs in rural areas and the increase in the country’s export potential.
But not everyone supports this parliamentary proposal.
“Opposition” to exports for agricultural producers
The proposal by the parliamentary agricultural committee to grant sugar beet producers the right to directly export sugar was met with criticism by the National Association of Sugar Producers of Ukraine.Yana Kavushevska, head of the “Ukrtsukor” association, began her Facebook post with a rhetorical question:
“Why, when something finally works in this country, do we have to disrupt it and create new problems, only to heroically solve them again later?”
She continued with several more questions and answers.
“When the Verkhovna Rada’s Committee on Land and Agrarian Policy believes that the approaches proposed by the sugar industry regarding quota allocation and export licensing to the EU violate the rights of agricultural producers—since the latter cannot export sugar directly—has any of the esteemed deputies considered how this aligns with EU practice? Do farmers in Europe even participate in the sugar trade? The answer is no. They grow sugar beets, while processors handle sugar production and sales, investing in processing efficiency, infrastructure, product quality, storage, and logistics. Everyone does their part, and this yields the results we see,” noted Yana Kavushevska.
The result is indeed there, and it has already been mentioned above. But there are other questions as well: “Is the contribution of those who grow sugar beets fairly reflected in this final result?” or “What economic outcomes can be expected, when, and for whom, if producers begin to compete with processors in the export market?”
Competitive Outcome
Last year’s experiment with the introduction of export duties on soybeans and rapeseed proved effective. And this became clear quite quickly. This outcome was a positive one for processors: summarizing the results for September 2025, the Ukroliyaprom Association stated that processing had risen to 250,000 tons, marking the highest monthly figure in history. As for agricultural producers, unfortunately, they lost more than they gained. And this is not just about losses in the price of their crops, but also about the problems and additional costs caused by the lengthy development of a mechanism to certify domestically grown products eligible for duty-free export.
In the event of new players entering the sugar export market, no rapid changes should be expected. This is the view of Oleksandr Buyukli, executive director of the First Ukrainian Agricultural Cooperative.
“The sugar market is quite complex and specific. Most agricultural producers who grow sugar beets process this raw material at factories and store the sugar there as well. Furthermore, this sugar is very often sold back to the same factory. This initiative is useful and could have a positive impact on the market in a few years. But in the short term, it probably won’t significantly affect the market, since sugar is a rather specific commodity and the number of markets we can export to is limited,” the expert notes.
From an economic standpoint, the more opportunities there are within the country—that is, the higher the competition—the more reason there is to hope that the efficiency and capacity of the sugar beet industry itself will increase. This is the view of Oleg Nivievsky, founder of the Center for Food and Land Use Research at the Kyiv School of Economics.
“I am, in principle, positive about this idea. From an economic standpoint, it simply expands opportunities for producers directly. And, to put it bluntly, it increases competition in the market. I understand that sugar producers might not like this, because it effectively creates additional export opportunities. And for them, this means competition and the inability to redirect, for example, raw materials through sugar factories. In other words, for them, this is a clear disadvantage, and that is why they oppose it. But overall, this is a positive step for the industry,” the expert believes.
Although there are still unresolved issues that practice may answer. Oleg Nivievsky continues.
“There is a downside here: whether farmers will be able to export on their own at all or not. But the market will decide that. Those who cannot export will form shipments. Perhaps sugar mills will also be involved in some way and will assist with this. As for the impact on the country’s export potential, everything will need to be analyzed in more detail,” the expert notes.
The focus is on processing
Agricultural lawmakers are expecting the government to make a fair decision on improving the sugar export mechanism and extending this opportunity to sugar beet producers themselves. Although, as is well known, the government’s priority is the development of processing. This was confirmed in a recent interview with Latifundist.com by Oleksiy Sobolev, Ukraine’s Minister of Economy, Environment, and Agriculture.
“In the coming years, we need to ramp up processing. Primarily because Ukraine, unfortunately, is still largely a raw materials economy. In 2024, exports rose to about $41–42 billion, but more than two-thirds of this volume comes from agricultural raw materials, ore, and steel, while the processing industry accounts for only about 10% of GDP instead of the roughly 20% typical of developed economies. On the other hand, we must understand that other countries may block the logistics of agricultural raw materials in the future not only for purely economic reasons. Therefore, expanding processing makes sense not only for the state but also for agricultural producers,” the minister believes.
In fact, no one doubts the importance of increasing processing capacity in the country. Experts have questions not about the goal, but about the means of achieving it.
Oleg Nivievsky, founder of the Center for Food and Land Use Research at the Kyiv School of Economics, said in an interview with
“On the one hand, no one would argue that domestic processing is a good thing. There’s added value and everything else. But the way this is being done right now—that’s where I have a lot of critical comments. Because it seems like the government knows nothing beyond export restrictions when it comes to the tools that could help develop processing. And from my perspective, this is absolutely the wrong direction for movement and development. All such restrictions do is redistribute all the added value from raw material suppliers—that is, from agricultural producers—to processors. Consequently, they do not create added value. At least in the medium and long term,” the expert notes.
He believes this is an entirely misguided approach to stimulating processing in Ukraine. Oleg Nivievsky continues.
“The market itself decides where it makes sense to stimulate processing. It is important that market participants—businesses—directly decide where it is more profitable to invest. After all, they are risking their own money, not government officials. And I think it is important to have an environment that stimulates investment in processing. Not through tax breaks, not through export restrictions, but specifically through access to infrastructure. Then there’s the judicial system and impartial tax administration. In other words, everything that’s referred to as the investment climate in general. And regarding operations in wartime conditions—that’s insurance against military risks. It’s a very complex matter. And taxes and export duties here—that’s not the top priority, of course. The investment climate—that’s what’s very important,” the expert notes.
It is also important to resolve all fundamental issues through dialogue. Yana Kavushevska, head of the “Ukrtsukor” association, also mentioned this in response to a parliamentary initiative to grant sugar beet producers the right to directly export sugar. Representatives of other agricultural sectors are unlikely to object, given their own previous experience. Soybean and rapeseed producers, for example, when they were “rewarded” with export duties, had virtually no such opportunity, as stated by relevant agricultural associations.
Author: Serhiy Vasylevych
