Officials say Kyrgyz sugar prices will remain stable despite global shortage

By Asyl Osmonaliyeva
2010-02-03

A global shortage of sugar is creating problems in Kyrgyzstan, which used to be an exporter of the commodity. Now, Kyrgyz residents are wondering if they will be able to afford it and if it will be available. [Asyl Osmonaliyeva]

BISHKEK, Kyrgyzstan - Kyrgyz officials are vowing to keep domestic sugar prices stable, even as a global shortage tightens its grip and domestic production falls.

The International Sugar Organisation is forecasting a global sugar crisis in the first half of 2010 as demand outstrips supply, but Kyrgyz officials are issuing reassurances in the face of such announcements.

At a December 28 press conference, the Director of the State Agency for Antimonopoly Policy Nadyrbek Turganbaev said the price of sugar in Kyrgyzstan will decrease in 2010.

Over the past year, white refined sugar has risen in price to US$734.50 from about US$400 per tonne. Experts predict the world sugar deficit could grow to 9m tonnes in 2010.

Turganbaev said that in Ukraine and Belarus — two of Kyrgyzstan’s key sugar suppliers — the price of electricity has not risen, keeping sugar prices low. That, combined with domestic sugar production, he said, will buffer sugar prices.

In Kyrgyzstan, sugar is one of the nine essential food items. The Ministry of Agriculture, Water Resources and Processing Industry controls the sugar supply and the Antimonopoly Agency controls its price.

According to the National Statistical Committee, Kyrgyzstan has four sugar production plants, but only one, JSC Kaindy-Kant, is operating. JSC Koshoi, JSC Aprosakh and Belovodskoe Sugar Plant are idle. All four were built under Soviet rule.

“After the collapse of the [Soviet] Union, the sugar industry gradually slowed down”, said Alexandr Barbalat, director of the JSC Aprosakh plant. “In terms of sugar production, the very hardest [times] were the last three years”.

Barbalat said farmers have moved on to more profitable agricultural crops because of unfavourable terms offered by Kaindy-Kant.

According to the owners of the farmstead “Vetka”, the former management of Kaidy-Kant’s sugar factory said beet roots clogged up the equipment without turning out any sugar. Therefore, farmsteads were forced to turn beets into fodder.

The Statistical Committee said no sugar was produced last year in Kyrgyzstan. In 2008, the country produced 10,700 tonnes. From 2006 to 2008, sugar production fell by 81.3 percent. Barbalat called that inexcusably low.

Imports compensate for the deficit. According to information from the national bank, during ten months in 2009, Kyrgyzstan imported 72,100 tonnes of sugar, mostly from Belarus, at an average cost of US$555 per tonne. Those imports did fell short of the 115,000 tonne demand.

According to statistical data, the price of sugar in Kyrgyzstan increased by 16.8 percent since December 2009, even though Turganbaev predicted stable sugar prices.

Barbalat cites different figures, saying the price of sugar imported from Belarus has risen approximately 20 percent over the past two months.

“Currently, the sugar market is feverish”, Barbalat said. “The prices are jumping and domestic sugar companies are idle, and in such an unstable situation it is very difficult to make any forecasts”.

Alymkan Mansurova, head of the Department of the Development of Quality and Food Security, said Kyrgyzstan is in a precarious position because it cannot produce enough sugar.

“We are dependent on imports for about 90 percent (of the product), and this is very dangerous for us”, she said. Barbalat agrees. “If the country definitively kills off the sugar industry, other countries will set prices that will be unsupportable for the population”.

The government set quotas on sugar imports, and is enforcing them for the Kaindy-Kant, Koshoi and Coca-Cola factories.

“If there were no quota, the factories would go bankrupt and the time when we supplied all of Central Asia would become only part of the past. Kyrgyzstan would never be able to reclaim the former glory of [being a] sugar republic”, said Barbalat. “We have reached a critical point, and without state support we will not be able to revive the industry”.

Makhsatbek, a Chui Oblast farmer, said that several years ago he grew sugar beets, but for various reasons -- like allegedly excessive dirt and inadequate sugar content -- factory managers reduced what they paid him. Growing the crop became unprofitable.

He is waiting to see how the factories will work with the farmers next season. If the terms seem profitable, then he will resume planting beets, he said.

“It takes years to restore confidence. But now the government, manufacturers and farmers are united in a common interest. This gives hope that the situation will improve for the better”, said Barbalat.

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