Less sugar than expected is still enough

Sugar reform in the EU signals the beginning of a new era for the Hungarian sugar industry. Though domestic sugar production is only a fraction of what it used to be a few decades ago, it is still sufficient to cover domestic consumption. Before privatisation, there were 12 plants producing sugar for export. Most international companies have left the Hungarian market during the past ten years. As a result of a decision by the European Commission to further reduce sugar quotas,. the streamlining of the domestic sugar industry is likely to continue. Maximum allowable production of the member states will become lower. In the future, not only the owners of production facilities will be entitled to a lump sum if they cease production, but producers of sugar beet will also be able to return 10 per cent of their quotas. This will mean EUR 42.25 for each tonne of sugar beet which is not produced. Regulations applicable in Hungary have not been published yet. Falling prices are also an incentive for producers to return their quotas. According to Zoltán Koczka, director of Cukoripari Egyesülés, producers not only received the lump sum when the factory in Kaba was closed down last year, but converting to corn turned out to be a very profitable move. This year’s weather has not been ideal for the production of sugar beet. Accordingly, this season is expected by Magyar Cukor and Mátra Cukor Zrt. to be shorter than usual. Production will be 20 per cent less than they had originally expected, but this is still enough to cover domestic demand. Nevertheless, a quantity of 80-100 thousand tonnes of sugar will be imported from the Balkans, which will push prices down. At the same time, 50 thousand tonnes of sugar produced in Hungary is to be exported.