Posted By Global Banking and Finance Review
Posted on January 14, 2025
By Sybille de La Hamaide
PARIS (Reuters) -French sugar maker Ouvre has decided to shut its sole factory due to technical and financial problems, the company told Reuters on Tuesday, marking the sixth sugar plant closure in France in as many years.
France is the European Union's largest sugar producer but a series of poor harvests, caused by adverse weather and diseases, has deterred some farmers from growing beets, cutting supplies for sugar makers. More recently a fall in sugar prices has hit profits.
Family-owned Ouvre, which operates one sugar plant located in Souppes-sur-Loing, south of Paris, with an output of about 60,000 metric tons of sugar per year, had been forced to halt output late last year due to severe technical problems.
It asked Cristal Union, France's second largest producer that has several sugar refineries in the region, to process the sugar beet harvested by its members in 2024/25 with the hope of restarting the plant in 2025/26.
But financial problems prompted it to decide a closure of the factory, which it had announced to representatives of the 109 employees, it said in an emailed statement.
"In a saturated market, where our competitors, large industrial groups, are reducing the number of their factories, the cost of rehabilitating our industrial tools exceeds our financial capacities," Julien Ouvre, chief executive of Ouvre and Sons, said in the statement.
The closure reduces the number of sugar factories in France to 19 from 25 at the end of the last decade. Cristal Union and Saint Louis Sucre, the French branch of Europe's largest sugar maker Suedzucker have both shut two, while top producer Tereos has shut one.
Ouvre has reached an agreement under which Cristal Union will take sugar beet from its farmers for the 2025/26 campaign, the company said.
The stoppage coincides with an expected reduction in sugar output across France over the coming season and a fall in sugar prices.
European sugar prices dropped 30% in the year to November to hit a two-year low of 599 euros per ton, according to the latest available data. Global sugar prices traded near three-year lows on Tuesday.
Saint-Louis Sucre told its members on Dec. 24 it would reduce the area for the 2025 harvest by 15% due to lower European sugar prices and high Ukrainian imports.
The overall impact on France's sugar output - about 4 million tons per year - is likely to be minimal as most farmers are expected to deliver their beets to Cristal Union or Tereos, which is also courting Ouvre's growers.
(Reporting by Sybille de La Hamaide; editing by Barbara Lewis)
