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Russia keeps sugar duty low amid rising prices

10 марта 2006 года

MOSCOW, March 10 (Reuters) - Russia, the world's top sugar buyer, will keep its raw sugar import tariff low to stimulate imports against a backdrop of inflationary domestic price rises.

The Economy Ministry said Russia would keep the tariff at the lowest level of $140 per tonne in April, unchanged from the previous six months, as the average New York futures price to which it is pegged remained high.

The Russian Institute for Agricultural Market Studies (IKAR) forecast the tariff would remain unchanged at least until July while imports of raws would keep rising.

"Under the current price situation, sugar imports in March-July are expected to be no lower than 300,000 tonnes per month," IKAR said in a note.

Russia imported 270,000 tonnes of raw sugar in February, compared with 142,000 a year earlier, it said.

Russian statistics agency Rosstat said this week that sugar prices, which rose in February by over 30 percent month-on-month, were one of the main contributors to a monthly rise in consumer prices of 1.7 percent.

President Vladimir Putin has berated the government over February's poor inflation figures. Prime Minister Mikhail Fradkov threatened ministers on Thursday with the sack if they missed this year's 8.5 percent inflation target.

Deputy Economy Minister Andrey Belousov said on Friday that the government will examine at a meeting next Wednesday a temporary suspension of sugar import tariffs as a means to contain prices and to keep inflation down.

"Several options (of combating inflation) will be examined, and it is not yet clear which one will be approved," Interfax news agency quoted Belousov as saying. Russian white sugar import tariff is fixed at $340 per tonne.


Russia refined over 3 million tonnes of white sugar from imported raws last year, up from 2.59 million in 2004. But the start of this year's refining season has been slow.

"Since the start of 2006, 253,000 tonnes of white sugar were produced, while in 2005 285,400 tonnes were refined in February alone," IKAR said. "Last year's sugar refining volumes are thus likely to be reached no earlier than by the end of March."

IKAR said rising imports did not reflect a deficit of the sweetener in Russia.

"By the start of the year stocks carried over from last year were higher than a year ago, imports of sugar from Belarus continued, while Belarus sugar was successfully competing with Russian sugar," it said.

The Russian Sugar Producers' Union, an industry lobby, has complained that Belarus exports to Russia more sugar than it refines from domestic beet, so damaging Russian producers by supplying cheap sugar refined from raws.

Belarus has denied the damage, saying its exports were equal to some four percent of the Russian market.

From Feb. 11, Belarus had to ship its sugar through only one customs post in the Moscow region. But the system appears not to work as the border between the two countries is porous.

Bilateral negotiations so far have resulted in a draft agreement under which Belarus will supply to Russia 250,000 tonnes of beet sugar a year in 2006-2010. The agreement may be signed this month, IKAR said.

The rise in sugar prices has hit confectionery producers. Prices of sweets and other sugar containing products have risen by 30 to 50 percent in the past two months.

"Many analysts believe that the rise will continue and small producers will have to leave the market," IKAR said.

Source: Reuters  |  #sugar   |  Comments: 0   Views: 66

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