RIGA - Two leading confectioneries have received licenses to import sugar, signaling a temporary turnaround in the long standoff between local producers of candy and sugar in favor of the former.
The Agriculture Ministry's licensing commission issued licenses for the import of 1,500 tons of sugar to Laima and Staburadze, Latvia's two largest confectioneries, both of which have continuously argued that forced purchases of domestic sugar were eroding their competitiveness and domestic and foreign markets.
The ministry based its decision on the fact that Latvia's two sugar mills were in breach of an earlier agreement by raising the sugar price above the stated ceiling. The only solution was to allow confectioneries to import cheaper sugar, the ministry explained.
However, if sugar mills agree to lower their price, the import licenses will be withdrawn.
Imported sugar is cheaper than domestic, though large imports had been prohibited under a trilateral agreement struck last year between sugar-beet producers, sugar factories and sugar processors to ensure stability on the market. According to the agreement, the maximum price per ton of sugar sold to sweets producers was 420 lats (626 euros), VAT included. To cover the price difference between domestic and foreign sugar, confectioneries received so-called "sweet compensations" of 86 lats per ton from the state to maintain their competitiveness.
With the issuance of the licenses, however, the situation has changed.
"Regretfully, sugar producers failed to understand that long-term development of the industry is more important that present-day interests of a single company," said Agriculture Ministry state secretary Laimdota Straujuma.
She said the ministry had taken all efforts to achieve a trilateral agreement between sugar-beet farmers, sugar producers and sugar-processing businesses.
"As the sugar mills broke the agreement, we as the licensing institution have no reason to withhold the sugar import license to sweets producers which they need to carry on their business," said Straujuma.
Liepajas Cukurfabrika (Liepaja Sugar Mill) CEO Valija Zabe called the ministry's decision "nonsense undermining the domestic sugar market."
She said that sugar producers were only charging extra in order to recoup additional expenses for transport and logistics services.
Zabe told the Baltic News Service previously that both the ministry and sweets producers had agreed to the extra charge as reasonable. The turnaround in the ministry's stance should be seen as the ministry's caving in to pressure from Laima, she said.
Juris Jonaitis, chairman of the board of Laima and Staburadze, said that the losses to sugar factories as a result of the violation could amount to as much as 250,000 lats by May 1.
"After Latvia joins the EU, the sugar price will grow significantly, and all market participants will face equal conditions. Unfortunately, until now Latvian manufacturers of sweets were put in the least favorable situation," Jonaitis said.
