Beet year 2016: low prices, flooding and frost

Despite the fact that 2016 was a moderate year for sugar with low prices, flooding and frost, it turned out better than expected for Suiker Unie. A short description of the season.

Coming from 2015 with a small beet campaign resulting in low capacity utilization in the factories, sugar sales started in 2016 with a high cost price. In addition, the European sugar market was in bad shape (see chart). This put pressure on Cosun's sugar activities. “It's not surprising that it results in a lower price than in 2015, but then came quarter four when the market picked up quickly. The price increase at the end really saved the year and with that the beet price reasonable to say. Together with the good performance of potato processor Aviko has straightened out a lot," said CEO Robert Smith.

However, the low European sugar price was not the only challenge in 2016. Another setback last cultivation year was the flooding in June. 'The heavy rain that fell in the southeast has caused a lot of damage, especially in beets. About 2.000 hectares had to be written off; this has led to a reduction in sugar tons per hectare. The sugar yield fell to 13,3 tons per hectare. That would otherwise have been 13,8 tons.'

Later in the year another problem arose: frost. 'The weather turned at the end of November, while there were still a lot of beets in the ground and many still on the heap that were at risk.' A scheme was hastily drawn up to accelerate the charging of the beets in the danger regions. The campaign was therefore halted. Ultimately, 175.000 tons of beet were processed under the frost control, 2.500 tons of beet were not processed and Suiker Unie has to lose 30.000 tons of sugar. Nevertheless, the result has increased as a result of the scheme. 'The campaign went very well and the factories ran well.'

For the grower, the 2016 season yielded slightly more than the previous year with an average hectare yield of 3.300 euros. In the future, the results will have to increase, also because the cost price is rising. Unitip should contribute to this. At the beginning of February 2017, 55 percent of members will participate in the registration system, but Cosun wants everyone to participate.

In order to stimulate this, a company will receive the amount of 2016 euros in 17/250. From 2018, the cooperative will make Unitip mandatory. 'Customers are asking for it, who want to see how the product is grown, what it takes to produce sugar. For us, it's about thinking about improving cultivation and making it more sustainable. A yield increase with less input.'

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.