News

Left with a 600,000 tonne surplus, Polish sugar producers are searching for new export markets.

2018-05-21  |  05:00
Says:Henryk Wnorowski
Function:President of the Management Board
Company:Krajowa Spółka Cukrowa
  • MP4

    Poland produced 2.3 m tonnes of sugar last year after the lifting of the sugar-beet and sugar quotas. This has led to a surplus of more than 600,000 tonnes on the domestic market. Exports to non-EU markets might be a solution to this problem. This, however, would require an appropriate system of logistics and infrastructure. To this end, Krajowa Spółka Cukrowa will build a new terminal in the Port of Gdańsk, allowing for the exports of about 300,000 tonnes of sugar a year.

    “The sugar business in Poland has been dealing with an entirely new reality since 1 October 2017. With the production quotas being lifted, all businesses may produce as much sugar as they see fit. In market terms, this has translated into a significant increase in sugar production – the last period saw a production level of more than 2.3 m tonnes of sugar,” Henryk Wnorowski, President of the Management Board, Krajowa Spółka Cukrowa SA, told the Newseria Biznes news agency.

    Market quotas for sugar were lifted at the beginning of October last year. Also, the minimum price for beets (EUR 26.29 per tonne) and the benchmark price of sugar (EUR 404 per tonne) are no longer applicable. Despite the production quotas being lifted, sugar-beet growers continue to receive direct subsidies. Poland will receive EUR 82 m over the next two years. These funds will be distributed between domestic sugar-beet growers.

    “Those who have planted sugar beets will be eligible to receive subsidies for sugar-beet production in addition to the “standard” area-based payments. Depending on the exchange rate of Euro as at 30 September, these payments will range from PLN 1,700 to PLN 1,800 per hectare ,” said Henryk Wnorowski.

    Poland is the third largest sugar producer in the European Union, preceded only by France and Germany. The average annual sugar consumption in Poland is at 1.7 m tonnes. The President of KSC noted that the increased production has led to a surplus of 600,000-650,000 tonnes of sugar, which should be exported abroad.

    – It’s simple and difficult at the same time. It’s simple because the global sugar market is an organised market. There is a sugar exchange in London which sets prices on a daily basis. The producer can sell the entire produce if the price is acceptable. However, there is a second, and more difficult, requirement – the producer has to arrange for the export of sugar as cheaply and fast as possible. Sugar is a mass product, so the only way to export it cheaply is by sea,”  said Henryk Wnorowski.

    Krajowa Spółka Cukrowa, which has a 40-percent share of the Polish sugar market, is building a sugar terminal in the Port of Gdańsk to allow for the exports of up to half a million tonnes of sugar a year. The project includes a bulk sugar silo with a capacity of 50,000 tonnes and a flat warehouse with a packing department providing an extra capacity of 10,000 tonnes of packed sugar, depending on foreign-market needs.

    “This terminal will be our window into the world, helping us to carry out the strategy of exporting at least 300,000 tonnes or, in the long run, as much as 0.5 m tonnes of sugar. These are our optimistic expectations. We want to produce more sugar but the Polish market is too small for our  production capacities. In addition, the scale of production has to be substantial enough to ensure low production costs. This is why we have been looking for savings by employing economies of scale,” said the President of Krajowa Spółka Cukrowa.

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