Our experience so far, and our potential, both corroborate expectations that Hellenic Sugar Serbia will become the leader of both Serbia and the region. Despite the fact that 2015 was the most perilous year for the sugar industry in Serbia, we meet 2016 with optimism.
As one of the very few foreign managers who also spent 17 years in managerial positions in large companies in Serbia, Petros Gemintzis is known as a man who knows the Serbian economy and its market inside out. He has worked as a general manager at Coca-Cola, Imlek, Velefarm and PepsiCo, and, as of recently, he is the CEO of the Crvenka and Žabalj sugar plants, which operate under the umbrella of Greek company Hellenic Sugar.
Hellenic Sugar CEO Gemintzis says that he associates Serbia with very nice experiences and that he is proud to have contributed to the development of the companies for which he has worked.
Considering your experience, what would you say about the Serbian agricultural potential and government incentives?
Serbia has a huge agricultural potential, which is untapped. In order for the Serbian agriculture and food industry to prepare properly for the challenges of the EU market, it is necessary for them to increase their competitiveness, first and foremost. For instance, Serbia is a sugar exporter, but the yield and the sucrose concentration of its sugar beet are much lower than in Northern Europe, despite the land here being of exceptional quality. The sugar beet yield in the EU varies from region to region and is between 55 and 65 tonnes per hectare, while in Serbia the yield is between 45 and 50 tonnes.
Together with sugar beet producers, we are focusing on increasing productivity year-on-year, as no progress has been made in this area in the last three to four years. We have a project that we want to implement together with scientific institutions, the agricultural faculties in Novi Sad and Belgrade, and the agricultural school in Sombor. The main aim of this project is to study the land composition in areas where sugar beet is planted and, subsequently, apply adequate agrotechnical measures, which would be of great assistance to our suppliers.
Considering that Serbian agriculture cannot expect to be granted the same subsidies as in the EU, the only solution is to increase productivity. We have an excellent plan that we are going to offer producers
We recently presented the project at a meeting in Novi Sad, with over 150 producers in attendance. Domestic experts are of the opinion that if sugar beet was properly handled with the help of modern agro-techniques, the yield in Serbia could reach more than 70 tonnes per hectare, with a sucrose content of over 16.5 per cent.
All of the aforementioned prompted Hellenic Sugar, as the proprietor of sugar plants in Crvenka and Žabalj, to more closely cooperate with producers and help them to increase the quantity of sugar beet produced per hectare. The project also stipulates long-term cooperation between agriculture experts and sugar beet producers and will be implemented on 60 land plots covering a total of 620 hectares.
We want to help our suppliers and we can guarantee them certain yield and digestion, provided they apply the advice provided by experts. All of this should contribute to the realisation of our end goal, which is boosting sugar production by 1,000 tonnes per hectare.
In terms of subsidies for agriculture provided by the Serbian Government, they are far lower than in EU countries, which is all the more reason to increase competitiveness, as a solution that should eliminate that handicap.
Looking back, do you think that investing in Serbia was a good decision and would you recommend the same to other Greek companies?
I have had very positive experiences here. For 17 years I have been working in various large, renowned companies that have been very successful in Serbia. I started my career here as a financial director of Coca-Cola and continued along the same path in other companies too. I am most proud of the fact that I have helped many of my co-workers develop and perfect their skills, and it is these co-workers that are now high up in their respective companies.
If you consider regional needs for sugar and how much sugar the Serbian sugar industry produces, you can see that the produced quantity is much smaller than market demands. This is an opportunity that we are not going to let slip by
Our experience so far, and our potential, both corroborate expectations that Hellenic Sugar Serbia will become the leader of both Serbia and the region. Hence, I would recommend other investors invest Serbia. On the other hand, the Serbian Government also has to help the industry become more competitive.
First and foremost, it needs to facilitate energy efficiency and do everything in its power to keep the prices of energy products as low as possible. We, for instance, use natural gas, and it would be of great help to us if the price was aligned with the prices of natural gas in neighbouring countries.
How connected are Hellenic Sugar in Greece and in Serbia?
Due to the major economic crisis in Greece, our HQ has gone through a very tough period. The problems reached their peak last year and the year before that, but I think the most difficult period is now behind us. This year we have two new sugar plants and I think Hellenic Sugar can handle its problems and produce enough sugar to fulfil the quota for exports to the EU. The problems in Greece did not impact negatively on the sugar plants in Crvenka and Žabalj, and they have always done well.
With a view to market challenges, in which way have you redefined your business strategy in Serbia and the Western Balkans?
There is plenty of room for development, considering regional needs for sugar and how much sugar the Serbian sugar industry produces. The produced quantity is much smaller than the market demands. We are not going to let this opportunity slip by, and we will do everything in our power to achieve the best possible results together, as well as to substantially increase our exports to other Western Balkan and EU countries.
Could you tell us something about the situation on the Serbian sugar market?
An exceptionally difficult and highly perilous year for the Serbian sugar industry is just behind us. The number of hectares under sugar beet has been the lowest in recent history and barely reached 40,000 in 2015, which, compared to 78,000 hectares in 2014, was down almost by half. Add to this low polarisation and the lowest production of sugar ever in this country – approximately 280,000 tonnes.
Although the purchase price of sugar beet grew slightly, the modest yield per hectare, combined with low polarisation for the second consecutive year, caused great concern among producers about the future of their crops.
Furthermore, exceptionally low prices of sugar last year raise the question of the competitiveness of the country’s sugar industry, which is exactly what happened to the neighbouring Balkan countries in the past.
In the following period, the biggest challenge in the sugar industry will be achieving a fast and dramatic boost of competitiveness in all stages of the supply chain – primary production, processing and sales.
In response, sugar plants should increase their production and capacities substantially, and reduce their overheads drastically, while being more energy efficient – given that energy consumption is the second biggest overhead after purchasing sugar beet. Better commercialisation of sugar products can also determine the final value.
Why do you feel more optimistic in 2016?
Despite last year being one of the most perilous years for the Serbian sugar industry, Hellenic Sugar Serbia managed to process the contracted 600,000 tonnes of sugar beet and produce 73,000 tonnes of sugar. We have reduced our overheads, thanks to production at one of our two plants, and with higher sales prices we have managed to fulfil our obligations on time and, at the Crvenika plant, compensate for last year’s losses, despite the low production volume.
The company is starting to prepare for the 2016 campaign, the goal of which is to increase production by at least 50 per cent. This goal requires both of our plants – in Crvenka and in Žabalj – to be producing actively. Thanks to bigger investments, we expect the sugar beet yield to be up compared to other domestic crops.