Sugar prices near 25-year highs are leading Russian producers to revitalise ailing refineries and reduce the dependence of the world's largest raw sugar importer on overseas supplies.
Millions of dollars of investment by firms such as Rusagro Group and Razgulay, as well as foreign companies, would raise the amount of sugar Russia produces from home-grown beet for use in jam and moonshine liquor.
But domestic growers rely heavily on import tariffs, which have come under scrutiny after a 30 percent spike in local sugar prices last month was blamed for higher-than-expected inflation. "The Russian sugar industry is in an upbeat phase of development," Serge Gudoshnikov, senior economist at the International Sugar Organisation, told Reuters.
"You can receive $300 to $400 a tonne profit easily on beet sugar. This creates an incentive for money to come," he said. World raw sugar prices hit a 25-year peak last month as top grower Brazil used more cane in the biofuel ethanol and as global stocks fell, demand rose and investment funds showed an increased appetite for the sweetener.
With Russia producing only 45 percent of the sugar it consumes, analyst's view beat cultivation as a potential growth industry. "The big companies in the sugar market have begun to talk about opportunities for merging and making their operations stronger," said Alexia Knyazev, general director of the sugar division of Russia's largest Agro-industrial group, Rusagro.
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