Ebro Puleva wont predict sugar hit before terms

By Jess Halliday and Clarisse Douaud

- Last updated on GMT

Related tags: Sugar, Sugar beet, European union, Spain

The sugar arm of Spanish food group Ebro Puleva has said it is
impossible to estimate the impact of EU sugar reform on its
business, until the regulatory situation in Spain is clarified.

Sugar reform was introduced in Europe in 2006 with the aim of improving competitiveness and market-orientation of the EU sugar sector and guarantee its long term future. Under the programme, financial incentives are offered to the less competitive producers to leave the market. The goal is to reduce the volume of sugar on the market by six million tonnes by 2010. Spain will have to cut 50 per cent of production, and Azucarera Ebro, the sugar business belonging to Spain's biggest food group, Ebro Puleva, said on Tuesday that it will be the most affected company. It is said to be the main sugar producer in Spain. However according to a Reuters report, the newspaper Cinco Dias interpreted this to mean that the company will, itself, slash sugar production by 50 per cent. Azucarera Ebro said: "Until final conditions detail the impact of new regulatory framework in Spain it is not possible to forecast the economic impact on Azucarera Ebro's accounts." ​ The final sugar reform terms for Spain for the period 2009 to 2014 are expected to be published this month. The company has said that it will take full advantage of the window of compliance, which it says will give it another year to develop substitute activities, and thus keep the effect on its bottom line to a minimum. In its financial report released in July, the company said its sugar business had suffered a 8.5 per cent drop in EBITDA to €37.3m. Other companies on the European sugar scene have already refocused their business activities so as to reduce the impact of the reforms. For instance, Tate & Lyle has been shoring up its capabilities in value-added ingredients. Azucarera Ebro is responsible for all of Ebro Puleva's activities in sugar, including production and sale of sugar, alcohol, animal feed and by-products). Its raw sugar beet is grown under contract by some 23,000 growers. Beyond sugar, the company also supplies molasses, which is a by-product of the sugar extraction process. A shortage of molasses has been cited by yeast extract producer Bio Springer as a cause of price increases for its ingredient.

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