The drop comes as farmers have reduced sugar beet sowing area to 199,000 hectares, a decline of 21.6%, mainly due to trade restrictions in the European Union and difficulties in accessing alternative export markets.

These changes follow the European Union's decision to reinstate tariff rate quotas in 2025, replacing the full trade liberalisation measures introduced after Russia's invasion of Ukraine in 2022. The shift has significantly altered Ukraine's export dynamics, particularly its access to the European market.

Despite the reduction in area, favourable weather conditions have slightly improved productivity. Sugar beet yields are expected to reach 49.3 tonnes per hectare, up 2% from last season and 4.4% higher than the five-year average.

However, exports are projected to decline to 505,000 tonnes in 2025-26, compared to 629,000 tonnes in the previous year. The export pattern has also shifted, with the European Union's share dropping sharply to 17% in 2024-25, while Africa and the Middle East now account for 32% and 29% of shipments, respectively.

Domestic consumption in Ukraine is also on a downward trend. Sugar demand is expected to fall from about 1.1 million tonnes before 2022 to 0.9 million tonnes in 2025-26. Even so, higher yields and carryover stocks of around 620,000 tonnes are likely to be sufficient to meet local demand while allowing exports to continue to traditional markets.

The current slowdown follows a record year in 2024, when Ukraine's sugar exports reached a 27-year high-the largest since 1997-bringing in about $419 million. This surge was driven by high global sugar prices, averaging around €510 ($590) per tonne, along with stable port operations.

However, the trend reversed after the expiry of trade preferences. While the European Union accounted for 77% of Ukraine's sugar exports in early 2023, its share fell sharply to 17% by the 2024-25 season.

At the same time, demand for sugar in Europe has weakened due to changing consumer habits, limiting market opportunities for Ukrainian producers. Falling global prices have further added to the pressure, with prices declining by about 38% since late 2023.

European industry bodies, including the European Association of Sugar Manufacturers and the International Confederation of European Beet Growers, have warned of a sharp drop in profitability for local producers. They have urged authorities to restrict raw sugar imports and protect the domestic market from low-priced supplies.

The downturn is being linked to a global surplus driven by major producers such as Brazil, India and Thailand, which has pushed international prices lower. There are also concerns within the European Union that some companies are bypassing trade rules by importing cheaper raw sugar from Brazil for processing within the bloc.

Amid these pressures, many European farmers are planning to reduce sugar beet sowing in the 2026-27 season. They have raised concerns over new import quotas for Ukraine and potential trade agreements with Mercosur, warning that increased low-cost imports could further destabilise the market.