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Suiker Unie concentrates sugar production

16 January 2008

Suiker Unie intends to concentrate sugar production at its factories in Dinteloord and Hoogkerk. Production activities at its Groningen factory will be terminated. Owing to the reduction in the quota level in the European sugar regime, production will decline in the years ahead. The two largest sugar factories will increase their production by lengthening the campaign.
 
The closure will ultimately lead to the loss of all jobs in Groningen. Alternatives will be found for the 98 employees; some will retire under the schemes for elderly employees and staff will be transferred to other Suiker Unie and Cosun companies subject to the existing social policy. 
 
The total beet sugar quota in Europe had originally been set at approximately 18 million tonnes. Pursuant to EU policy, 6 million tonnes must be withdrawn from the market in order to allow sugar imports from the least developed countries (the LDC countries). The reform must be realised by the sugar producers and will lead to a sharp drop in margins throughout the supply chain. To date, sugar production has been cut by only 2.2 million tonnes. Through an additional quota reduction, Brussels wishes to take a further 3.8 million tonnes out of the market. This represents more than 20% of current European sugar production.
 
The entire sugar industry is undergoing radical restructuring in the space of just a few years. Companies are being forced to reposition themselves and many sugar factories are being closed throughout the EU.
 
In the current circumstances, Suiker Unie does not believe there are opportunities to produce bio-ethanol profitably from sugar beet. Construction with Nedalco of a bio-ethanol plant linked to the sugar factory in Groningen is therefore not an option.
 
The decision to close the factory has been taken in order to reduce production costs further, also in anticipation of Suiker Unie's lower production volume in the future. By concentrating its production, Suiker Unie is seeking to retain the position it has built up in the EU and believes that beet farming and sugar production in the Netherlands will remain profitable in the long term, although production will be at a more modest level.
 
Suiker Unie's Works Council has been asked for its opinion on the proposed decision and talks will be held with the trade unions.