Expectations were high prior to the 2021 beet price announcement. Maybe too high. There was therefore a disappointing sound among growers. Royal Cosun's disappointing financial result is also not satisfactory. The company presented a new strategy that should structurally boost the balance, but is that enough?
De beet price over the past campaign, the beet quota amounted to €40 net per tonne. That is 50 cents higher than the result in 2020. A disappointment for many growers. They have seen their cultivation costs rise and are also looking at a significant increase this year. Thanks to the better quality figures, the balance is €228 per hectare higher, but that is by no means sufficient for all growers. Especially now that grain prices are at a relatively high level.
Boerenbusiness is very curious about how you - as a sugar beet grower for Cosun - experience the results. Do you still have confidence in the cultivation? Do you agree with the strategy? The answers to these questions will be discussed shortly.
write-down
The financial results of the cooperative also generated critical reactions. Turnover amounted to €2,3 billion (+13%), which is a record. But at the bottom line a loss of €8 million was recorded. Especially because Cosun has to recognize €32 million as an exceptional expense in the result. This is a write-down of the assets of the Duynie ingredients factory in Cuijk. That the new CEO Hans Meeuwis Now swallowing that bitter pill is not surprising. The underperforming factory is a result of longer-term processes taken by predecessors. Meeuwis does not want to wear that as a millstone around his neck during his term of office.
Yet there were grumblings among members, even around the digital members' meeting. The idea is that the cooperative - and especially its directors - can get away with it very easily. Unilever's move is mentioned as an example. That concern fired recently 1.500 managers in the higher echelons of the company because the company is faltering and not innovating.
Balance up
Cosun's directors also realize that a balance of just over €3000 per hectare is not sufficient for cultivation. At the same time as the announcement, the firm wish was expressed that the beet price over four campaigns should be at least €45 per tonne. The EBIT (operational income) must also increase by a third to €300 million. Whether such an amount is sufficient remains to be seen. No one knows the cost price in 2025. Moreover, Cosun speaks of 'minimal'. Hopefully there is more in store.
Growers did not receive the news with much cheer, it is noted Boerenbusiness after speaking to various growers and hearing sounds. First see, then believe, is the motto. Many questions are raised about the cost price and the risk of beet cultivation. The removal of the seed coating with neonicotinoids has had a major impact. Yield and quality loss due to leaf mold in the fall is also becoming an increasing issue. More treatments only increase the cost. If grain prices continue to rise, they will mainly attract arable farmers on clay soil. The balance of wheat is now moving around that of beets, but the risk is lower. The cultivation technical advantages in particular should be the deciding factor.
Away from sugar
To become less dependent on the volatile sugar price - which only really picked up steam halfway through last year - Cosun wants to focus more on other sources of income. The core activities and commitment to vegetable protein. This is called 'Unlock 25'. Beet growers are still waiting. The unprecedented possibilities of vegetable protein have been talked about for years, but the market still has to largely develop. The fact is that the group is slowly moving away from its core business of sugar. It already disappeared from the name (Suiker Unie became Beet Company) and now also from the returns. Beet growers do not identify with this and that causes friction.
The fact that suppliers (growers) and buyers both have a very different sound is also clearly visible in chicory cultivation, which is cared for by Cosun subsidiary Sensus. This company would like to see the area increase significantly, because the inulin market is good. Growers see a meager net balance and many risks in cultivation. It is not easy for Sensus to obtain sufficient acreage.
Figures too late?
It remains to be seen whether beet cultivation will find itself in the same dilemma. The cultivation has often been in difficult times, only to bounce back and have had excellent years. There is also a clear dividing line between growing areas. Clay growers in particular are critical and give up more quickly, which is also evident from a shift in the LLBs. Whether the recent figures have an impact on the area remains to be seen. The news came relatively late, while most construction plans have already been finalized. Changes in cultivation are mainly made before the new year.