Ukraine's agricultural sector
In 2022, Ukraine's utilised agricultural area covered 41.3 million hectares, including 32.7 million hectares of arable land (State Statistics Service of Ukraine (SSSU)). This agricultural area makes Ukraine the largest agricultural country on the European continent. 45% of the country's surface area is made up of particularly fertile humus-rich soils, known as "rich" chernozioms. These are found mainly in the country's central plain.
Figure 1 - Production of the main types of agricultural products in volume (tons) in Ukraine in 2021 Source: FAOStat
Figure 2 - Figure 2 - Production of the main types of Production of the main types of agricultural products, excluding meat, agricultural products, excluding meat, by by value (thousands of US dollars) value (thousands of US dollars) iin n Ukraine in 2021 Ukraine in 2021 Source Source: FAOStat : FAOStat
Note Note :: data data not available for meat. not available for meat.
The country mainly produces cereals (corn, wheat, barley), potatoes, sunflower seeds and sugar beet.
VALEUR
Figure 3 - Evolution of production of the main types of agricultural products (in tons) in Ukraine Source: FAOStat
Note: 2022 data not available for meat.
FARMSTRUCTURE
Marked by its communist past, the Ukrainian agricultural sector is characterised by 110 huge vertically integrated agricultural companies, known as agro-holdings*, which control all or part of the production chain (cultivation-breeding, processing, trade). Their aim is to achieve a return on capital invested, and to achieve this they invest in state-of-the-art, large-scale equipment and in the use of inputs. 20 of these companies account for 14% of Ukraine's Utilised Agricultural Area (UAA).
57% of the UAA is farmed by companies of more than 1,000 ha.
Figure 4 - Figure 4 - Farm structure Farm structure in Ukraine in 2021. in Ukraine in 2021
Source : Source : based on data from based on data from the State Statistics Service of the State Statistics Service of Ukraine (SSSU) Ukraine (SSSU).
ADRIVINGFORCEINTHEUKRAINIANECONOMY
Agriculture plays a major economic role in Ukraine, accounting for 10.9% of GDP in 2021 and nearly 14.7% of employment (World Bank). In comparison, the sector accounts for 1.4% of European GDP and 4.2% of employment (Eurostat). In 2021, agricultural products accounted for 41% of Ukrainian exports, worth 27 billion dollars
The sector, which has been severely affected by the current conflict, is estimated to have suffered the equivalent of $80 billion in damage and losses (World Bank), and its reconstruction is estimated to cost at least $56 billion (World Bank, 2023), not including mine clearance ($32 billion).
PRODUCTION - SUGAR BEET
In 2022, Ukraine harvested 183,800 ha of sugar beet (FAOStat), i.e. 12% of the area harvested in the European Union. By way of comparison, this corresponds to the sum of the areas harvested in Belgium and the Netherlands in the same year.
5 - Figure 5 - Sugar beet area harvested by ukrainian oblast in 2022. Sugar beet area harvested by ukrainian oblast in 2022 Source Source: based on data from the State Statistics : based on data from the State Statistics Service of Ukraine (SSSU). Service of Ukraine (SSSU)
Production is mainly distributed in the north and northwest of the country, with Khmelnystkyi and Vinnytsia being the two main sugar beet production areas. This area coincides with rich chernozem soil. In 2022, Ukraine produced 9.9 Mt of sugar beet, equivalent to the output of Belgium and the Netherlands. In the same year, the EU-27 produced 103 Mt (FAOStat).
Figure
Figure 6 - Figure 6 - Ukrainian sugar beet production basins and location of sugar factories sugar beet production basins and location of sugar factories Source Source: based on data : based on data from the State Statistics Service of Ukraine (SSSU) Details of factories can be seen in Table 3, page 18 from the State Statistics Service of Ukraine (SSSU). Details of factories can be seen in Table 3, page 18.
The average Ukrainian yield was 54 tonnes per hectare in 2022, but shows great disparity between regions. For example, the Lviv region exceeds the European average yield, which was 72.5 tons/ha in 2022 (FAOStat).
7 - Figure 7 - Average sugar beet yield by oblast in 2022 Average sugar beet yield by oblast in 2022
Source Source: based on data from the State Statistics : based on data from the State Statistics Service of Ukraine (SSSU) Service of Ukraine (SSSU)
CAMPAIGNDURATIONANDRISKOFFROST
According to data from the Kiev and Lviv weather stations, average temperatures during the sugar processing period range from 0°C (November) to -6°C (January), and can drop as low as -13°C at the end of January. For sugar beet, severe frost is defined as temperatures below -5°C for at least three consecutive days.
While the average length of the sugar campaign is shorter than in the European Union, some agro-holdings reach 100 days (Ukrprominvest-Agro) or even 130 days (Astarta-Kyiv). In France, the campaign lasts between 80 and 110 days and, as in Germany, extends into January.
Figure
Ukrainian legislation on the use of GMOs is confusing, and is said to have hindered the development of their use in the country. However, according to the USDA's UP2022-00 "Biotechnology and Other New Production Technologies Annual" (2020), unofficial GMO cultivation in Ukraine currently involves around 50-65% soybeans, 10-12% rapeseed and less than 1% maize. GM seeds are therefore used, but not registered as such. On August 23, 2023, the country adopted a law on the state regulation of genetic engineering activities and state control of the circulation of genetically modified organisms and genetically modified products (Law no. 3339-IX). This law, which will come into force on September 16, 2026, aims to ban the cultivation of genetically modified sugar beet and oilseed rape for 5 years, with the exception of cultivation for research and trials in open systems.
NEWGENOMICTOOLS(NGT)
The use of NGTs is not mentioned in Ukrainian legislation, and does not yet appear to be on the legislative agenda. The only articles mentioning NGT provide an overview of European discussions, without ever drawing any parallels with Ukraine.
CARBONPERFORMANCE
The high fertility of Ukrainian soils means that crops require less nutrient input than the European average. Nutrient inputs (nitrogen, potash and phosphate fertilizers) are on average 1.5 times lower in Ukraine than in the European Union.
Figure 8 - Figure 8 - Nutrient use per area Nutrient use per area of cultivated land in 2021 of cultivated land in 2021.
Source : Source : based on FAOStat data based on FAOStat data
NITROGEN
1.5 times less fertiliser used in Ukraine than in the European Union.
Figure 9 - Figure 9 - Use of NPK nutrients per area Use of NPK nutrients per area of cultivated land of cultivated land Source : Source : based on based on FAOStat data FAOStat data
POTASHK2O
On average, Ukrainian arable production performs better than European production.
In addition, nutrient consumption in Ukraine is higher in agro-holdings than in other agricultural enterprises. The latter are less inclined to use this costly parameter to increase their yields.
PESTICIDES
Ukrainian legislation on pesticides is more flexible than European legislation. Several active substances banned in the European Union are authorised in Ukraine. These include Smetholachlor, a powerful herbicide used on corn and sugar beet crops (banned in the EU since April 2024), and benomyl, a fungicide used on cereal crops in particular. It should be noted, however, that some European countries have exemptions for the use of active substances banned in the European Union, such as France and Germany in the case of S-metholachlor.
As part of Ukraine's accession to the European Union, the country will have to comply with European legislation. With this in mind, Ukraine has already undertaken a number of legislative reforms, including a draft law on plant protection products and fertilisers (no. 11062; 4 March 2024), which should bring Ukrainian legislation into line with EU regulations on market access for plant protection products, their active ingredients and fertilisers.
PRODUCTION - BEET SUGAR
PROCESSING
Ukraine produced 1.5 million tonnes of raw beet sugar in 2022, of which 0.8 million tonnes dedicated to exports (53% of the production).
Figure 10 - Figure 10 - Processed sugar Processed sugar beet and raw (centrifuged) beet and raw (centrifuged) beet sugar production, beet sugar production, Ukraine Ukraine. Source Source: based on : based on FAOStat data FAOStat data.
According to assesment done by the United States Department of Agriculture (USDA), sugar production reached 1.7 million tonnes in 2023, with domestic demand estimated at 900,000 tonnes (BNE Intellinews). Export availability would therefore be 800,000 tonnes.
According to Share UA Potential figures, sugar production increased by 38% between 2022 and 2023. Exports more than doubled between 2022 and 2023, reaching 506,000 tonnes in 2023.
60% of exports in 2023 were accounted for by the 3 largest sugar producers: Radekhivskyi Sugar (Pfeifer & Langen), Ukrprominvest-Agro and Astarta.
By way of illustration, the ratio of sugar beet to sugar is 7.2 in the Ukraine, compared with 6.25 in France. This means that it takes 7.2 tons of sugar beet in Ukraine to produce 1 ton of sugar (Latifundist).
SUGARCONTENT
In 2022, the average sugar content of sugar beet at the time of consumption was 16.7%, 0.2% lower than in 2021 (16.9%). Two regions are above the national average: Vinnytsia (17.2%) and Lviv (16.8%) (Latifundist).
EXPORTS AND IMPACT ON EUROPEAN FLOWS
Before the war, Ukraine exported mainly to countries in the Caucasus region, Uzbekistan, and to a lesser extent to the European Union.
Figure 12 - Figure 12 - 14 main 14 main destinations for Ukrainian destinations for Ukrainian sugar Source: based on sugar Source: based on Chattamhouse data Chattamhouse data.
In 2022, the top 5 destinations for Ukrainian sugar exports were European: Romania, Poland, Italy, Greece and Hungary (Latifundist).
For 2023, of the 800,000 tonnes of sugar available for export, almost 500,000 tonnes of white sugar have been exported to the European Union.
Figure 13 - Figure 13 - Sugar (cane Sugar (cane and beet) imported by and beet) imported by the EU-27 from its main the EU-27 from its main suppliers (outside the suppliers (outside the EU) and Ukraine, and EU) and Ukraine, and Ukraine's share of Ukraine's share of European imports European imports Source Source: based on : based on Eurostat data Eurostat data
In 2022 and 2023, Ukrainian sugar imports supplemented the volumes traditionally imported by the European Union, and thus corresponded to net sugar imports. In addition, European sugar stocks rose from 1.5 to 2.1 million tonnes between October 2022 and 2023, an increase of 600,000 tonnes (+36%) (FranceAgrimer) Ukrainian imports therefore correspond to 80% of European stocks.
The increase in European imports of Ukrainian sugar has come at the expense of Cuba, Mauritius and, more recently, Serbia. In addition, Brazilian sugar transiting the UK now arrives in the EU as Brazilian sugar.
In 2023, Ukraine will account for 35% of European white sugar imports, compared with 30% in 2022 and less than 3% before the war. All sugar combined, Ukraine accounted for 24% of European sugar imports in 2023, making it the European Union's second-largest supplier, behind Brazil (29%).
Romania, Italy, Hungary, Bulgaria and Poland are the main gateways for Ukrainian beet sugar exports.
For Bulgaria, the increase in imports was at the expense of other exporters, but for countries such as Romania and Italy, volumes imported from Ukraine were added to traditional imports. Details of sugar volumes imported by the above countries can be found in appendices 8 to 15.
Figure 14 - Figure 14 - Ukrainian beet sugar imported by the EU-27
INWARDPROCESSINGPROCEDURE(IPP)
Inward processing procedure allow European companies to import goods duty-free, which are then processed in Europe and re-exported. The aim is twofold: financial, by exempting these companies from customs duties and taxes; and economic, by encouraging European processing and strengthening the competitiveness of companies when re-exporting. The rules of origin for sugar imported under the IPR do not apply.
Figure 15 - Figure 15 - Sugar imported by the EU-27 from Ukraine, under normal regime (left-hand column) and under Sugar imported by the EU-27 from Ukraine, under normal regime (left-hand column) and under IPR (right-hand column) IPR (right-hand column). Source Source: based on Eurostat data : based on Eurostat data.
In the past, Ukrainian sugar under IPR has been imported by the European Union (2017 and 2019). However, no volumes have been recorded since.
ORGANISATION OF THE SUGAR SECTOR
According to 2021 data from the State Statistical Service of Ukraine (SSSU), Ukrainian agroholdings own or operate around 93% of the sugar beet production area.
10 of them, shown in Table 2, operate 70% of the sugar beet production area, with an average surface area of 23,700 hectares. The order of magnitude of the area cultivated with sugar beet is therefore well above the European average of 13.44 ha per farm. The Czech, French, German and Polish averages are 66 ha, 19 ha, 16 ha and 11 ha of sugar beet acreage per farm respectively.
In Ukraine, Ukrainian citizenship is required in order to be a landowner, and the maximum area allowed per individual and legal entity has been 10,000 ha since January 1, 2024 (Law 552-X on amending certain legislative acts of Ukraine concerning the conditions of circulation of agricultural land). As a result, agro-holdings lease agricultural land to hundreds of landowners, some of whom own only a few hectares of land.
2022-23campaign 60%ofsugarproductionby
These companies are vertically integrated and control all stages of the production chain: sugar beet cultivation, processing at their refinery(s), recovery of processing by-products (pulp, molasses), storage, marketing via integrated transport networks. It should be noted that the supply of sugar beet can also be supplemented by sourcing from employers' farms.
Table 2 - Table 2 -Top 10 sugar companies in Ukraine Top 10 sugar companies in Ukraine Source Source: Ukrsugar and official company websites : Ukrsugar and official company websites
Agri-Industrial Holding «AstartaKyiv» crops (sugar beet, corn, wheat, sunflower, rapeseed), sugar refinery, soybean crushing, livestock farming, bioenergy, silos
«Radekhivskyi Sugar» LLC (Pfeifer & Langen)
«UkrprominvestAgro» LLC
Agrofirm
«Svitanok» LLC
«Gnidava Sugar Refinery» LLC
(sugar beet), 5 refineries
crops, 2 refineries, beef-dairy cattle farming, flour production, breadmaking.
«Teophipolskyi Sugar» LLC crops, refineries
«ASPIK GROUP» LLC crops, refineries
«Galychyna sugar Company» LLC
«Gals-Agro» LLC
crops (sugar beet, wheat, barley, maize, sunflower, soya), 2 sugar mills, livestock (turkey, pork), arboriculture (walnut, apple) (200ha), 4 biogas plants, 2 silos, mixed fodder plant
t (2018)
t (2018)
t (2018)
Table 3 - Table 3 - Ukrainian refineries and production capacities. Ukrainian refineries and production capacities Source Source: company websites and Latifundist. The : company websites and Latifundist The associated map is available in figure 6, page 6. associated map is available in figure 6, page 6
Reorganization of refineries in the various production basins has already begun, with the shutdown of several refineries in the Sumy (north-east) and Kharkiv (east) regions. Economies of scale can also be achieved by restructuring the industry, particularly in less productive regions such as Kiev.
ENERGY COST
The price of Ukrainian gas has been multiplied by 5.7 between 2020 and 2022, representing one of the biggest expenses in the sugar beet transformation process. In Ukraine, it takes an average of 170 m3 of gas to produce one tonne of sugar (Latifundist), representing a cost of €166 in 2022.
To reduce factory production costs, several agro-holdings have invested in coal-fired instead of gas-fired production, while others are developing their own biogas production unit(s), valorizing the waste from the sugar transformation process.
SUGAR SECTOR
CONCLUSION
The Ukrainian sugar industry is characterized by an organisational and competitive structure quite different from that in the EU. Agro-holdings, huge verticallyintegrated operations, manage 93% of the sugar beet area, and ten of them even manage 70% Moreover, the average cultivated area is 23,700 ha, compared with 13 44 ha in the European Union, i e 1,763 times more
Although Ukraine, like other European countries, has suffered from rising energy costs, which have had an impact on sugar processing costs, labor and investment costs are much lower. In addition, the presence of fertile soils means that less crop inputs are used: up to 1.5 times less fertilizers than in the European Union!
The opening up of the European market to Ukraine has resulted in an influx of sugar, which has led to an increase in European stocks, with Ukraine having exported 484,000 tonnes of sugar to the EU in 2023, compared with 147,000 tonnes in 2022.
APPENDICES
Appendix 1: Sugar beet production EU-27 and Ukraine. Source: based on FAOStat data.
Appendix2:SugarbeetareaharvestedinEU-27andUkraine.Source:basedon FAOStatdata.
Appendix3:AveragesugarbeetyieldsinEU-27andUkraine.Source:basedon FAOStatdata.
Appendix 4: Sugar production in Ukraine and in the European Union. Source: USDA (Ukraine) and European Commission (European Union).
Appendix5:EuropeanwhitesugarimportsfromUkraineovertheperiod2018-2020 (a)andtheperiod2021-2023(b).Source:basedondatafromtheStateStatistics ServiceofUkraine(SSSU).
Appendix6:EU-27sugarimports(caneandbeet).Source:basedonEurostatdata.
Appendix7:SugarbeetandsugarproductioninMoldavia.Source:basedonFAOStat data.
Appendix8:Romania-Sugarbeetimportsandexports.Source:basedonEurostat data.
(a)sugarimports(caneandbeet)fromallovertheworld
Imports of Ukrainian sugar to Romania are net imports. Following the increase in import volumes, Romania increased its exports to Bulgaria (x1.3), Hungary (x6.5) and Slovenia (+100%) in 2023.
(b)sugarexportstotheEU-27.
t o n s
Appendix 9: Italy - Sugar (cane and beet) imports and exports. Source : based on Eurostatdata.
(a)sugarimports(caneandbeet)fromallovertheworld
In 2023, Italy imported 71,231 tonnes of sugar from Ukraine, compared with 8,012 tonnes in 2022. These volumes were absorbed nationally, since Italy's sugar exports to other EU countries did not increase over the same period.
(b)sugarexportstotheEU-27.
t o n s
Appendix10: Hungary-Sugar(caneandbeet)importsandexports.Source:based onEurostatdata.
(a)sugarimports(caneandbeet)fromallovertheworld
In 2023, Hungarian imports of Ukrainian sugar (x 7 between 2022 and 2023) replaced imports from South Africa and Croatia. This increase in sugar imports from Ukraine has therefore not translated into an increase in Croatian exports to the EU-27. (b)sugarexportstotheEU-27.
Appendix11:Poland-Sugar(caneandbeet)importsandexports.Source:basedon Eurostatdata.
(a)sugarimports(caneandbeet)fromallovertheworld
Imports of Ukrainian sugar to Poland are net imports. It is possible to consider that the entire volume imported from Ukraine in 2023 (37 thousand tonnes) was re-exported by Poland, the country having increased its exports by 32% in 2023, from 329 to 436 thousand tonnes. Sugar was mainly re-exported to Germany.
(b)sugarexportstotheEU-27.
Appendix12:Greece-Sugar(caneandbeet)importsandexports.Source:basedon Eurostatdata.
(a)sugarimports(caneandbeet)fromallovertheworld
Exports of Ukrainian sugar to Greece increased by a factor of 1.5 between 2022 and 2023, corresponding to net imports. As this trend has not led to an increase in sugar exports, Greece seems to have absorbed the entire imported volume.
(b)sugarexportstotheEU-27.
Appendix13:Croatia-Sugar(caneandbeet)importsandexports.Source:basedon Eurostatdata.
(a)sugarimports(caneandbeet)fromallovertheworld
Exports of Ukrainian sugar to Croatia have been multiplied by 2.8 between 2022 and 2023, and correspond to net imports (+16,400 tonnes). The country has also increased its sugar imports from South Africa. In total, the country increased its sugar imports by +48,600 tonnes in 2023.
At the same time, sugar exports amounted to 101,000 tonnes in 2023, i.e. +20,600 tonnes compared to 2023. The entire volume imported from Ukraine therefore seems to have been re-exported to the European Union, mainly to Italy and Slovenia.
(b)sugarexportstotheEU-27.
Appendix14:Bulgaria-Sugar(caneandbeet)importsandexports.Source:based onEurostatdata.
(a)sugarimports(caneandbeet)fromallovertheworld
Exports of Ukrainian sugar to Bulgaria increased by a factor of 8 between 2022 and 2023 (+46,000 tonnes), with Ukrainian sugar replacing the bulk of Serbian exports, which fell by a factor of 4.5 over the same period (-36,000 tonnes).
On the other hand, Bulgarian sugar exports increased by 68% over the same period, mainly to Greece and Cyprus. t
(b)sugarexportstotheEU-27.
Appendix15:Czechia-Sugar(caneandbeet)importsandexports.Source:basedon Eurostatdata.
(a)sugarimports(caneandbeet)fromallovertheworld
Exports of Ukrainian sugar to the Czech Republic increased by a factor of 4 between 2022 and 2023 (+18,000 tonnes), as Ukrainian sugar replaced exports from Argentina, India and, in part, Colombia.
On the other hand, with Czech exports to Europe increasing by only 7,000 tonnes over the same period, most of the imported Ukrainian volume seems to have been absorbed by the domestic market.
(b)sugarexportstotheEU-27
