Following an extremely tough year for the Serbian sugar industry, this company – headquartered in Greece – has managed to overcome current restructuring problems successfully and believes that it has the potential to become the biggest producer and supplier of sugar in the Balkan region
“We have just left behind an extremely difficult and most critical year for the sugar industry in Serbia,” says Petros Gemintzis, Director of Hellenic Sugar, which has taken extraordinary measures to maintain its competitiveness.
What are the major challenges facing the sugar industry?
– A record low number of hectares in recent history, barely reaching 40,000, along with weak polarisation, resulted in the lowest ever sugar production totals in the country, of approximately 280.000 tonnes. Despite slightly higher purchase prices for sugar beet, moderate yields per hectare, combined with low polarisation for a second consecutive year, ensured producers were left frustrated about the future of the crop.
On the other hand, last year’s extremely low sugar prices serve to bring forward unequivocally the inexorable question of the competitiveness of the country’s industry, as happened previously to all other neighbouring Balkan countries.
Going forward, the challenge of the industry lies solely in the rapid and dramatic improvement of its competitive edge in all phases of the value chain: primary production, processing and trade.
How can sugar factories improve their competitiveness?
– Considering the limitations in the purchase prices of sugar beet, higher incomes in primary production depend solely on the generating of much higher yields and higher polarisation approaching the average standards of Northern Europe.
Sugar factories should, in turn, improve their yields and capacities significantly, reduce their fixed costs drastically and seek extra energy efficiencies, since energy consumption represents the second biggest cost component after sugar beet procurement. Improved commercialisation of sugar products could also add to the final value.
The challenge of the industry lies solely in the rapid and dramatic improvement of its competitive edge in all phases of the value chain: primary production, processing and trade
How are you addressing these challenges?
– Within this framework, the Hellenic Sugar Industry in Serbia succeeded in continuing its activities in 2015 despite financial problems created by last year’s huge losses. In adverse conditions of an absolute absence of financing and growing dissatisfaction among primary producers, the company finally defended its share by contracting close to 600,000 tonnes of sugar beet and producing more than 73,000 tons of refined sugar.
A dramatic reduction in fixed costs – thanks to the concentration of production in only one of two factories and a balanced commercial policy aided by higher sale prices – enabled the company to meet its obligations on time and convert last year’s losses into positive results for the Crvenka Factory, despite low production volumes.
Are you more optimistic about prospects for 2016?
– Having restored its market reputation as a reliable business partner, Hellenic Sugar – Serbia has already started preparing its next campaign by targeting a 50 per cent increase in activities and volumes. Such a target requires allocating production to both factories: Crvenka and Žabalj.
In order to encourage larger primary production of sugar beet, the company has – among many other activities – launched a large scale project, in cooperation with a number of scientists and institutions, which aims to bring science closer to the fields and thereby ensure the sustainability of competitive production in years ahead.
Provided 2016 is a successful year, the company will continue to invest in higher volumes in order to capture growing export opportunities in neighbouring countries.
Hellenic Sugar Industry is a regional group of companies operating in Greece and Serbia. Given that the group is overcoming current restructuring problems successfully, it undoubtedly has the potential to become the biggest producer and supplier of sugar in the Balkan region, and 2016 can become the first year towards realising this challenging vision.