Most sugar producers in Russia have either already diversified their product range by adding on granulated beet pulp or are planning to do so soon. Consistently high external demand for beet pulp helps domestic companies absorb fluctuations on the sugar market. In the coming years, China will be playing an ever increasing role as an importer of granulated beet pulp from Russia as it is expected to consume beet pulp produced by as much as a third of Russian mills, according to the RusAg Centre for Industry Expertise.
Tracking the whereabouts of 80 per cent of beet mass
When sugar-containing juice is squeezed out of crushed beets, the mass of the remaining product – raw pulp – exceeds 80 per cent of the total mass of processed beetroots. Pulp is then dried and made into granulated feed for livestock, primarily cattle.
The nutritional value of granulated feed is ten times as high as that of fresh pulp and only marginally lower than that of oats. It is a product that keeps quite well, whereas granulation helps cut transportation costs five times.
Granulated pulp is an additional source of income and an environmentally safe ‘recycling’ opportunity for sugar makers, given that raw pulp is known to oxidise rapidly and harm the soil.
Pivoting to the east
Over the last few years, Russia has been the global leader in beet pulp exports, ramping up its export volumes on an ongoing basis. Compared to 2001, when domestic sugar makers exported just 17,100 tonnes of beet pulp worth USD 1 million, exports in 2018 shot up to 1.28 million tonnes worth USD 186.2 million. It follows therefore that the price of a tonne of beet pulp rocketed over this period from USD 58.5 to USD 145.5, close to 200 per cent.
The last two years saw a rise in returns on granulated pulp sales abroad as fodder crops in Europe slumped, driving the export price up to RUB 13,000-15,000 per tonne for the 2019/2020 season and RUB 18,000-20,000 for the 2020/2021 season, while the cost of its production is staying flat at RUB 3,000-5,000.
Granulated pulp production is directly proportional to the volumes of processed beets and the availability of drying facilities. Over the 2019/2020 season, Russian mills processed 50.47 million tonnes of beets and made 1.91 million tonnes of granulated pulp. For the 2020/2021 season, with processing coming in at 31.3 million tonnes of beets (as crop areas shrank and yields fell), granulated pulp production can tentatively be estimated at 1.22 million tonnes. Mirroring a reduction in beet processing volumes, granulated pulp production collapsed about 40 per cent as well.
Given the volumes of beets processed in the 2020/2021 season, granulated pulp production could potentially come in at 1.56 million tonnes, a level that could be achieved with the installation of additional drying and granulation facilities.
To quote from a study published by the RusAg Centre for Industry Expertise, ‘In recent years, not only have an overwhelming majority of sugar makers grown their production capacities, but they have also put in place pulp drying and granulation facilities. Product diversification is an advantage for any sector, but it is seen as a particularly vital stage of production upgrade and a driver of profitability under the prevailing market conditions in the sugar industry. Over the coming years, the market of granulated pulp will be driven by China opening up its market for Russian pulp supplies. This is a great opportunity for a third of sugar makers in Russia, because they may find it more worthwhile to export to China than to Europe, particularly those of them who are based in the Volga region and beyond the Urals, for reasons such as geographical proximity and cheaper logistics.’