Death of Kyrgyz Sugar Industry Leaves Bitter Taste

Farmers in Kyrgyzstan say the once-thriving sugar industry has collapsed due to lack of government support and the low prices paid by refining plants.



“We are the only ones who’ve grown sugar beet this year, and we may well be the last,” Oleg Abroskin, chief agronomist with Vetka, a farm in northern Kyrgyzstan.



Kyrgyzstan, and specifically the Chui region, used to grow enough sugar beet to cover all its domestic needs with a surplus that was exported to other countries in the region.



These days, Abroskin’s farm is struggling to find a buyer.



Kyrgyzstan still has two refineries that can process sugar beet, but they are refusing to take the Vetka farm’s production as there is not enough of it to make it worth switching on the machines.



According to an official from the State Anti-Monopoly Committee, which looks at contractual relationships between farmers and refineries, “So little sugar beet was planted this year that it’s impossible to get the refineries going. The tiny volume of sugar beet will only make the equipment dirty.”



The Vetka farm now faces the tough choice of either transporting its produce to Kazakstan, at additional cost, or using the beet as animal fodder. Managers have not yet calculated their losses, but they expect to face a huge deficit.



Abroskin says the farm delayed harvesting the beet when the agriculture ministry promised to help it arrange exports to Kazakstan.



“We were promised assistance, so we did not gather the beet in October. But no help has arrived,” he said, adding that the situation was getting desperate as rain was forecast, followed by frost and snow.



The farm’s troubles appear to mark the demise of what was once a successful industry, providing thousands of jobs in addition to export revenues.



In the course of five years, Kyrgyzstan has gone from producing 812,000 tons in 2003 to 155,000 tons last year, and next to nothing in 2008.



Sugar production was identified as so important that a seven-year government programme was launched in 2004, envisaging loans and subsidies for farmers and plans to expand production. But the project has been abandoned.



As Burul Abdyldaev of the agriculture ministry’s quality control and safety standards department explained, “The programme was never funded, and in 2007 it was dropped from the government’s state programme.”



Other farms have given up and switched to other crops, leaving Vetka as perhaps the last producer.



“What happened this year can be seen as a boycott both of the refineries and of the government,” said former beet farmer Ulan Osmonov. “No one wanted to factor in our expenditure on seed, fuel, the wages we paid our hired workers. We grew tired of working at a loss, so we decided to switch to more profitable crops.”



Abroskin blames government for failing to support the industry. “The agriculture ministry does not provide support; it merely calculates how much has been planted and harvested. Even a district department could do that, and we don’t need a ministry to do so,” he said.



Rahim Jailov, a lawyer with a legal firm that works with farmers, said it was not entirely fair to blame the agriculture ministry since it does not arrange purchase contracts, except for strategically important items like grain.



But he did agree that there was a lack of strategic direction for planning and coordination in the agriculture sector.



With more than 2,000 farms scattered around the country, most of them small and unaware of market conditions, Jailov said, “Every farmer grows crops at his own risk. That is why every year we see a surplus of one crop and a shortage of another. This year, for example, onions are in short supply and they’ve doubled in price compared with last year, whereas potatoes and carrots are in abundance and farmers are unable to sell them.”



The decline in sugar beet production has additional causes, not least the changing fortunes of the refineries.



All four refineries in Kyrgyzstan process imported cane sugar, but only two – Koshoy and Kaindy-Kant – can handle sugar beet. These two plants are currently owned by a Russian firm, and have been accused of setting terms that leave farmers unable to make a profit.



In a strongly-worded statement in July, the Kyrgyz agriculture ministry said the low purchase prices on offer, coupled with poor yields, were behind the farmers’ decision to grow other crops in the 2008 season.



The ministry recommended that the refining industry be demonopolised by means of a state buyout of either the Kaindy-Kant or the Koshoy plant, which would then be held in collective ownership by the beet growers.



As another way of stimulating domestic production, the statement suggested placing a ban on sugar imports from non-members of the World Trade Organisation, WTO. Most sugar imports currently arrive from Kazakstan, which unlike Kyrgyzstan is not yet a WTO member.



Abroskin sees the flood of sugar imports as tangible proof of the domestic industry’s collapse.



“You now see sugar from India and Ukraine in our markets, yet we’ve completely destroyed our own sugar industry… and become dependent on foreign imports,” he said. “This sector should have been developed as it had a lot of potential. We could have provided people with jobs, kept ourselves supplied with sugar and even exported it.”



Alymkan Mansurova, who heads the agriculture ministry’s quality and food security department, says the fact that Kyrgyzstan is now dependent on sugar imports shows that the industry is on its last legs.



“When imports of any product begin to exceed 40 per cent [of consumption], domestic production falls, and the producer can no longer develop and works merely to survive,” she said. “It’s doubly risky when you’re talking about foodstuffs consumed as essential daily items.”



Asyl Osmonalieva is an IWPR-trained journalist in Bishkek.