Ukrainian agriculture minister angered with government policy on sugar import

Ukraine's Agriculture Minister Oleksandar Baranivsky criticized the government for a decree that is likely to allow import of thousands of tons of Brazilian sugar.

Baranivsky said the decree allows state-run companies, including oil and gas company Naftogaz Ukraine, to import some 30,000 tons of processed sugar cane from Brazil in a deal worth tens of millions of dollars (euros).

According to the decree, the deal is aimed at stabilizing sugar prices, which have risen sharply in recent months, pinching consumers in this impoverished ex-Soviet republic.

Baranivsky, however, called the deal "a scheme ... tailored to siphon more (government's) money ... by allowing importers of the raw sugar to avoid paying taxes and customs."

Excerpts of the decree, which was issued last month, were published in Kiev's Business weekly earlier this week.

It was not immediately clear why an oil and gas company would seek to get involved in sugar imports, although all state-run companies are exempt from paying customs and taxes on imported goods, including sugar imports within prescribed quotas.

Officials from the Naftogaz Ukraine were not immediately available for comment Wednesday.

The Ukrainian Association of Sugar Producers called the deal an "economic crime." In a statement, the association urged the ministry to lift production quotas on domestic sugar production that is mainly based on sugar beets.

Ukraine annually produces some 1.8 million metric tons (1.98 million U.S. tons) of sugar at about 120 plants.

Oleh Nivyevsky, an analyst from the Institute of Economic Studies, said the imported sugar deal probably would not result in huge job losses, because the domestic sugar industry would benefit from processing the imports. The industry employs as many as 1.5 million people, he said.

"Remaining factories will be processing imported sugar and will be working eight months per year," he said.

Nivyevsky, however, said Ukraine may be forced to close up to two-thirds of those plants if it joins the World Trade Organization _ closures that would result in the loss of tens of thousands of jobs in the sugar and other related industries.

The closures would come as a result of new tariffs under the WTO and new quotas on importing raw cane sugar, according to a report of the U.S. Agriculture Department.

"It (the sugar industry) will die anyway," he said.

WTO membership is an important goal for the pro-Western government, which needs major foreign investment programs to boost production and improve living standards.

Parliament earlier this year adopted eight bills that are essential to WTO membership, however lawmakers failed to adopt six other bills, including one on sugar production, the AP reports.

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