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Sugar supply chain
SECTOR SPECIAL SUGAR
Beet
Cane
2. Crop
Education
18 ISSUE 22 J.
1Production
processing
clients about what's happening on the Brazilian sugar
market, for example. But we can also provide clients with
information on the Asian sugar market or what producers
are doing in, say, Russia and Ukraine. We simply have the
best intelligence on all the subsectors in the F&A industry.
And the developments in these various markets trigger
behaviour among players right across the market, whether
they're producers or end-users."
The truth, Duff says, is that there is not one answer for
customers in the commodities business, and certainly not
for those in the sugar business. Sugar producers in different
parts of the world are all facing different challenges. In Brazil,
the credit crunch has left quite a few players in dire need of
an equity injection to stabilise their capital structure, after
making highly leveraged investments in new mill projects.
Which is why the country is seeing a wave of M&A activity.
"Meanwhile, in the EU the industry is coming to the end of a
lengthy reform period that has seen the prices of sugar and
sugar beet decline substantially. While at the same time a
number of developing countries have been granted greater
access to the EU market. This has changed the market in
terms of price structure and price volatility, and EU players
face both new challenges and new opportunities in dealing
with these new market realities," Duff says.
3. Trading marketing
This is where Rabobank comes into its own, Bottenbruch
says. If a company wants to change its strategy in response
to the outlook on the sugar market, Rabobank can help
them make that change. Some producers are moving
to Brazil because that is where they see future growth. For
instance, French company Tereos invested in Brazil in 2000,
effectively diversifying its risks. One of Rabobank's German
clients has diversified away from sugar to salty snacks.
Another, Nordzucker, has decided to take over as much
sugar production as they can and recently acquired the
sugar operations of Danish rival Danesco. Some are exiting
the sugar sector altogether, selling off to bigger players
with the scale to deal with fluctuations in the market. "We have
THE WORD
