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. Last Updated: 07/27/2016

Sugar Lobby Wants State to Sweeten Pot

Having expelled white sugar from the market and succeeded in its battle for quotas on raw sugar imports last year, the national sugar lobby is asking for more.

"We have erected a barrier in the way of refined sugar," Vasily Severin, chairman of the Russian Sugar Union, said Tuesday at the union's annual meeting. "But that is not enough."

Now sugar companies have come up with a whole new set of demands ranging from requests for subsidies to pleas for more restrictions on imports.

Severin called on the government to conduct centralized purchasing of sugar for all public bodies, including the army, to pay sugar union officials from budget accounts, provide cheap loans to the industry and raise euro-denominated tariffs.

"Severin is like Chairman Mao to everybody here," said one industry insider at the gathering. "Everybody respects him, but it is clear that he asks for too much."

However, one of the proposals voiced by Severin has already been approved by the interministerial commission on foreign trade, which advised the Cabinet to raise import duties so that they account for the euro's decline against the dollar.

Traders who paid about $210 million for import quotas at November's auction pay an import duty on sugar of 5 percent instead of the 30 percent tariff on imports in excess of the annual quota of 3.65 million tons.

Prices dropped to a 13-year low last April, making domestic beet farming a loss-making business.

Should the Cabinet decide to move the goal posts while the game is already under way, it will benefit quota holders.

Quota buyers bid the price too high during the auction and are now seeking to protect themselves from competition from the rest of the industry.

But while proposals voiced by Severin and quota holders are seen as radical and divisive, most sugar barons are united in their efforts to push for protective measures that will boost domestic beet growing.

"What we need is a long-term program for beet growing," said Georgy Tishchenko-Romanchenko, director of the Kubansakhar sugar holding.

The sugar industry is recommending that quotas be sold in proportion to the amount of beets companies grow and that import duties should change in relation to prices on international markets.

Import duties were introduced in 1997 to curb imports of white sugar — then hovering at 1.5 million tons a year — and later they were slapped on raw sugar, helping to stabilize production of sugar from beets at 1.5 million tons a year, half of what it was 10 years ago.

Sugar prices dropped to a 13-year low of 4 cents per libra in April last year, making domestic beet farming a loss-making business, but recovered to 10 cents per libra by fall 2000. A libra is an ancient Roman unit of weight equal to 327.45 grams that is used in the international sugar trade.

The nation's annual sugar consumption is between 4.5 million tons and 6 million tons a year, of which up to three-quarters is produced from imported raw cane sugar.

Ten years ago, two-thirds of the nation's sugar was made of local beet.