PARIS (Reuters) -French sugar and ethanol maker Cristal Union promised farmers high prices for their 2023 sugar beet harvest in a bid to secure supplies at a time when the crop is less attractive, confident it can pass rising costs and higher prices to clients.
The cooperative group, France's second-largest sugar producer, posted a net profit of 97 million euros ($102 million) in the 2021/22 financial year ending on Jan. 31, up from 69 million euros a year earlier. Sales revenue was up 6.4% at 1.8 billion euros, helped by high sugar and ethanol prices.
"The year 2022/23 should also be very good. The first quarter was already excellent and we managed to pass on the rise in price and costs to our consumers," Cristal Union Director General Xavier Astolfi said in an interview following a news conference to discuss its results.
Astolfi provided an objective to pay 40 euros per tonne of sugar beet for the 2023 harvest, up from 29.37 euros in 2021 and 35 euros promised for the 2022 crop sown earlier this year that will be harvested in the fall.
Farmers needed to benefit from higher sugar and ethanol prices and be compensated for surging costs, including soaring fertilizer prices due to the war in Ukraine.
However, some uncertainty remained, notably on gas prices and supplies. Sugar mills are high gas-consuming factories.
After a 10% fall in area sown with sugar beet in the past five years, Cristal Union expects the area to stabilise as the higher price offered would prevent farmers from turning to grains, which saw their prices skyrocket, and being discouraged by diseases that ravaged crops in recent years.
Competitor Tereos, which declined to give a price for the next sugar beet harvests, anticipates a 10% fall in area by 2024 and cutting some capacity, possibly through the closure of a factory.