(Bloomberg) -- Russia is producing so much sugar that it’s running out of storage space.

Output has doubled in the past decade and is expected to climb 20% to a record this season thanks to favorable weather conditions. That’s forcing producers to store refined sugar outside factories in the open air -- which damages quality -- or in independent warehouses at an extra cost, according to Russia’s sugar manufacturers union.

“We have to do this because we don’t have storage,” the union’s chairman, Andrey Bodin, said in an interview at an International Sugar Organization seminar in London. “This sugar may have to be later reprocessed again as we don’t know how a buyer will take this sugar due to the quality issues.”

The nation’s sugar industry has seen a transformation in recent decades, switching from being a huge importer of raw sugar to having excess supply to offload. Yet Russia struggles to compete in the export market because it isn’t as efficient at processing as other countries, meaning its costs are higher. The increased storage expense also comes at a time when margins are being squeezed by low sugar prices.

Russian sugar output is estimated to total 7.2 million tons this season and exports may only reach 1 million tons, mostly to nearby countries, said Bodin, whose union represents 95% of Russia’s producers. That’s causing a storage shortfall of about 2 million tons, he said.

Looking ahead to next season, Russian sugar production will probably fall as low domestic prices discourage beet plantings, Bodin said, without specifying the amount.

--With assistance from Agnieszka de Sousa.

To contact the reporter on this story: Manisha Jha in London at mjha13@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin

©2019 Bloomberg L.P.