Avebe posts positive gains after 'difficult' year

- Last updated on GMT

Related tags: Potato starch, Potato, Starch

Dutch potato starch supplier Avebe has finished off 'a difficult
year' with €0.4 million in profit, the 5000 strong co-operative
reports. But a tight economic climate, a poor harvest, and the
strong euro left their mark, with the Veendam-based company warning
'the effects of the latter two factors in particular amounted to
several tens of millions of euros'.

But a tight economic climate, a poor harvest, and the strong euro left their mark, with the Veendam-based company warning 'the effects of the latter two factors in particular amounted to several tens of millions of euros'.

The firm that sells a range of potato and tapioca starches to the food industry added that job cuts are likely in the next year as the company prepares itself for a challenging 2004/05.

"It will be possible to make an actual start with cutting back staffing levels in the Netherlands on the basis of individual agreements with employees,"​ said the co-operative in a statement this week.

Avebe has undergone a thorough restructuring in the past 18 months in a bid to cut costs and boost the bottom line, slashing some 450 jobs in 2002 and shrugging off its Glucona subsidiary to Purac.

"The organisation has been adjusted, the steering of the operation has been strengthened and is now more market-driven than previously, the share in tapioca is growing and the cost reductions are substantial,"​ the firm said in a statement this week.

Potato starches, used in a range of applications from soups to desserts, are more expensive than their wheat or corn counterparts which means, working in an intensely price-driven segment, the co-operative is driven to gain market share through innovation and development work.

As such, in October the company unveiled a new research and development centre at an undisclosed price to bring the Dutch company closer to its customer needs.

"We must drive into the functionality of our potato starches to give our customers the solutions they're looking for,"​ a spokesperson for Avebe commented at the time to FoodNavigator.com.

The new centre has been organised into two application groups: snacks and liquid and powdered foods and will house Avebe's various technology teams, associated laboratories and pilot scale equipment.

On tapioca, the firm said this week that the 'position was strengthened by the extension and renewal of the product mix and by entering into joint ventures.'

"Avebe managed to extend its interests in China, Indonesia and Brazil during the financial year,"​ the firm added this year.

The company, that produces 800,000 tonnes of starch annually from four million tonnes of potatoes, has production units in The Netherlands, Germany, France, Sweden, US, Thailand and most recently China.

Yesterday the European Commission proposed to keep potato starch production quotas at the same level as last year for the EU producing countries, posting 507 403 tonnes for the marketing years 2005/06 and 2006/07 in The Netherlands, and 1.98 million for all the countries.

Restrictions on production applied in the cereal sector, in particular set-aside, and the increase in production of potato starch at the beginning of the 1990s led to the introduction of a quota system from 1995/96 aimed at limiting potato starch production.

Total starch production in the EU has grown at a rate of about 2 per cent per year on average since 1998; the share of potato starch in starch production as a whole is declining, at around 20 per cent.

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