Withdrawal of sugar

Many people believed that hard times were over for local producers of sugar in 2006, when Eastern Sugar closed its Kaba factory and handed back its production quota which accounted for 25 per cent of Hungarian production. Streamlining of the sugar industry has continued since then. The EU Commission has decided to reduce quotas further, though the details concerning Hungary are not known yet. Even producers of sugar beet are to receive EUR 43 for each tonne of beet which is not produced. The fact that sugar can be stored for a practically unlimited period of time is reflected in the price which is to be cut to EUR 25.50 by 2009. In 2008, only two sugar factories will remain in Hungary. While sugar beet had been grown over 130,000 hectares in 2004, this was reduced to 37,000 hectares by 2007. A sugar production of 298,000 tonnes is predicted for 2008 which will be sufficient to cover domestic consumption. In spite of the great pressure created by EU regulations to cut production, the Austrian Agrana group, the owner of Magyar Cukor Zrt. has declared on several occasions that it intends to maintain production of sugar from domestic sugar beet in Hungary. As a result of rising costs and shrinking demand, they have decide to concentrate domestic production in the Kaposvár plant and – handing back a third of their production quota – close the Petőháza plant. 80-100,000 tonnes of sugar are also to be imported from the Balkans which is twice the quantity imported before accession to the EU. Although this is bad news for domestic sugar factories, it will help in keeping consumer prices low. n