Tereos, the world's fourth largest sugar maker, said it aimed in the next three years to boost its sugar beet output in France by 20 percent, or 3 million tonnes, to face the end of European sugar quotas which is expected to lead to a fall in prices. As part of a reform of the EU's farm policy, member states last year agreed to liberalise sugar output by 2017 and to abolish minimum sugar beet prices blamed for limiting European sugar exports.
"We are taking a rather offensive approach on this reform," Tereos CEO Alexis Duval told Reuters in an interview. "If you have a drop in prices you need a rise in volumes. If we are not able to raise our output we will certainly have a significant impact on our results," he said. Tereos usually produces 13-14 million tonnes of the 34 million tonnes of sugar beet produced in France per year. Nearly half of the planned increase in output would come from better yields and the rest from a rise in area, he said.
Tereos will offer farmers who do not usually grow sugar beets the chance to join the co-operative and to increase supplies at its nine sugar plants in France with the aim of having an average beet campaign of 130 days, up from around 110 days currently. "To be competitive today in Europe you need to be at 130 days. Below that we are behind our colleagues in northern Europe who have gone further in terms of restructuring," he said.
Low sugar prices seen up to the end of last year would impact the company's results in the fiscal year to March 31, he said. Revenues would likely be down on the record 5.0 billion euros ($6.9 billion) in the year to September 30, 2012, and closer to the 4.4 billion euros scored the previous year. Tereos last year changed the year end for its consolidated accounts from end September to end March. The group produces sugar, ethanol and starch in Europe, Brazil and Asia, mainly in China where it is in partnership with Singapore's Wilmar International. The two companies bought a starch plant in northern China in April, marking their second joint project in the country.
