EU eyes sharp cut to Ukrainian sugar imports after price slump, sources say

By Sybille de La Hamaide and Pavel Polityuk

PARIS/KYIV (Reuters) -The European Commission is looking to cut Ukrainian sugar imports sharply after EU producers complained that large shipments have fuelled a collapse in sugar prices, three sources told Reuters.

Sugar imports from Ukraine are part of a larger dilemma the EU has faced in the last three years.

Brussels initially provided free access to its agricultural markets as part of its support following Russia's invasion but protests from EU farmers have led it to scale back support.

EU farmers have argued imports from Ukraine have undercut local supplies, driving down prices and making it more difficult for them to secure sales.

The sources said the intention to lower sugar imports had been raised by EU agriculture commissioner Christophe Hansen when he met the leaders of French farm unions and industry representatives at the Paris farm show in late February.

Hansen did not say precisely by how much imports could be cut but said they would be "well below" current levels, the sources who were present at the meeting said.

He also said he would tackle other imports from Ukraine, such as grains, without giving details, two of the sources said.

Asked to comment, the Commission said it was aware of the concerns of EU farmers and member states regarding certain agricultural imports. It declined further comment.

Ukraine's Agriculture Minister Vitaliy Koval, in a reply to Reuters, stressed the importance of maintaining continuity in supplies of Ukrainian products to the EU.

FAIR DEAL

Ukrainian Deputy Economy Minister Taras Kachka during an online conference last week expressed hopes for a fair agricultural deal between the EU and Ukraine.

"The EU understands that we cannot bang our heads against the wall and return to the terms of trade that we had 10 years ago," he said.

"Today we still have time to find a constructive solution, we still have a few weeks - we are waiting. Ukraine is as flexible as possible and is ready to ensure transparency in trade. This is more a matter of politics than trade," he added.

The EU removed duties on Ukrainian farm products after Russia's 2022 invasion.

The move led to a sharp rise in cheaper Ukrainian sugar imports, which reached 400,000 tons in the 2022/23 season and over 500,000 tons in 2023/24, far exceeding the pre-war quota of 20,000 tons.

European sugar prices shed more than 30% last year, the latest EU data showed. However, white sugar futures rebounded in the past two months, supported by a weakening outlook in top producers including India.

European farmers' complaints prompted the EU in July last year to re-introduce an import quota of 262,650 tons.

The EU halted sugar imports from Ukraine after the first part of the quota was exhausted, forcing Ukraine to re-route sugar shipments to other countries, with Turkey becoming the main destination, according to Ukraine's sugar union Ukrtsukor.

The second part of the quota, for 109,440 tons of Ukrainian sugar opened in January but Ukraine has exported little so far.

EU sugar production has ranged from 14.5 to 17.6 million tons per year since 2018, depending on the sugar beet crop, EU data showed. Consumption is steady at around 14 million tons while imports constitute 2 million-3 million tons.

(Reporting by Sybille de La Hamaide in Paris, Pavel Polityuk in Kyiv and Phil Blenkinsop in Brussels. Editing by Nigel Hunt, David Evans and Mark Potter)