In 2006, Slovenia, Bulgaria, Latvia, Portugal and Ireland accepted EU incentives offered to less-efficient countries to cease sugar production when a temporary restructuring scheme to bring European sugar production in line with the WTO and other international obligations. Strong producers such as Germany, France and Holland thrived in a changed market and sugar prices have soared since then. The pan-European sugar quota expires in 2015 and the countries that had abolished their sugar beet production now want to re-enter the sugar industry.
A feasibility study confirms return on investment in re-establishing Slovenia’s sugar industry after it lost beet growing and closed the processing plants as demanded under the EU CAP policy. A return to sugar production is recognised as important for jobs and for economic development and will comprise sugar beet growing and processing with sugar as the final product, as well as the possibility to produce bioethanol. Sugar prices have soared over the past few years and sugar beet has a secondary use as animal feed. In addition, sugar beet is valuable for crop rotation and locally grown sugar beet is a step toward Slovenia’s self-sufficiency in food. Many sectors will participate in the revival of sugar beet processing: mechanical engineering, electrical engineering, chemical industry, transport, etc. Additional advantages include the market for sugar beet and sugar with high and steady demand.
Advantages of the project
In order for sugar production tobe viable, sugar should trade at above 500 euros a tonne. The current price of 700 euros to 800 euros a tonne and the data showing that the European countries have made more money from sugar operations since 2006 than during the 50 previous years make the proposed investment project in sugar infrastructure lucrative.
There are clear benefits to consumers and taxpayers that result from a strong local sugar industry. Producing sugar at home will cut down on transport costs and provide a product with many secondary uses such as animal feed and crop rotation, as well as the raw material for the biorefinery plant. The feasibility study on a return to the industry underlines the advantages provided by producing in Slovenia an essential, high-quality food ingredient at stable and competitive prices.
The calculations show that the investment in the amount of approximately 120 million euros is needed for re-entering the now booming sugar industry. The minimum expected return in investment is 6.5% per year. The breakeven point should be reached in 15 years. The total number of persons engaged in sugar beet production and processing is approximately 1,000 (sugar beet growers, processing facilities, transport, chemical industry, servicing, etc.).
Local farmers will participate with a minimum of 30% of the total value of the investment. The remaining 70% of the funding is can be provided by foreign investors and bank financing.
It is a great opportunity for foreign investors as there is increased interest in bringing foreign partners with their money and management know-how to re-establish the sugar sector.
Združenje pridelovalcev sladkorne pese Slovenije
(Slovenian Sugar Beet Growers Association)
Kerenčičev trg 5/a, 2270 Ormož
Phone: +386 (0)51 634 341
URL: www: sladkornapesa.si