French Sugar Group Tereos to Stagger Farmer Payments to Season End

(Reuters) – French sugar group Tereos will pay sugar beet farmers in more instalments this season than previously as it struggles with a market slump that it expects will lead to a full-year loss.

Tereos maintained a previously agreed guaranteed price of 25 euros ($28.05) per tonne of sugar beet for the October-September 2018/19 season, it said in a letter on Friday to cooperative members.

Detailing payment terms, it said it would pay a second instalment of 6.50 euros per tonne of sugar beet at the end March, after an initial 12.50 euros/tonne at the end of the calendar year, according to the letter seen by Reuters.

Arrangements for payment of the outstanding 6 euros of the guaranteed price for 2018/19 will be announced at a general assembly in June, Tereos said in the letter.

Tereos had committed to paying farmers a minimum 25 euros per tonne of sugar beet for both 2017/18 and 2018/19, the first two seasons following the end of European Union sugar quotas.

Last year the group had paid the first half in November during the annual sugar beet harvest, before paying the remainder in late March.

The change for 2018/19 means growers will not be fully paid until near the end of the season.

Tereos said in its letter it would offer special credit facilities this season to help farmers who might face liquidity problems, including advances of up to 2 euros a tonne.

For following seasons, the company said it had changed its payment system to base them on market prices, with two instalments in December and March, complemented by rebates and other bonuses later in the season.

A surge in output after the EU abolished production quotas in 2017 and a 40 percent slump in prices in the past two years in an oversupplied world market have hurt European firms.

Tereos reiterated in its letter it expected to record a full-year loss in 2018/19.

It did not plan to close any sugar factories, provided production sites were adequately supplied, and was focusing on a target to generate 200 million euros in savings within three years, it said.

Tereos last year also announced it would explore options to open its capital to outside investors.

Suedzucker, Europe’s largest sugar refiner, has this year announced plans to close several factories, including two in France, in response to the market downturn.