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Südzucker: Angry protests in France

March 14, 2019 at 10:44 AM , Der AUDITOR

MANNHEIM. As the Handelsblatt has reported Europe’s leading sugar giant, the Südzucker AG, intends to withdraw from the world market because of the permanently low sugar prices. The plan is to focus exclusively on Europe.

Dominic Risser, the company spokesman, explained on Tuesday that global competition is extremely distorted, which is partly due to the production subsidies in India and Thailand. Südzucker, headquartered in Mannheim, is the world's leading beet sugar producer to date with production ranging well over five million tonnes.

Protests in France

Several factories will fall victim to the new strategy, two in France, two in Germany and one in Poland. On Tuesday, the sugar beet growers from Cagny (Normandy) and Eppeville (Hauts-de-France) protested against the closure of the two French factories. If the plans are implemented, around 2,500 farmers will lose around 40 percent of their income, explained Franck Sander, President of the Beet Growers' Association, at a rally outside the company's headquarters.

In addition, 250 jobs in the factories themselves will be affected and many people would also be indirectly affected. Sander wants to propose to Südzucker's management that the farmers take over the two threatened factories if operations are really shut down next year. Risser stressed that “[w]e have every intention of closing these factories”. The aim is to reduce the overcapacity.

Südzucker had announced plant closures earlier this year. Annual production is to be cut by 700,000 tonnes. Annual savings should thereby amount to up to EUR 100 million. For the 2018/19 financial year, the company anticipates a decline in revenues of EUR 100 to 200 million due to the decline in prices.

The sugar prices in Germany have taken a missive dip over the last few weeks. Granulated sugar is at present trading around 0.45 EUR/kg DDP Germany.

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- price chart, raw sugar, CBOT
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What are incoterms?

Incoterms are internationally recognized trade clauses that facilitate the trade in goods with the help of standardized contract formulas. They regulate the distribution of costs and obligations and thus prevent misunderstandings and disputes. They must always be agreed by both contracting parties and confirmed by signing the contract.

Overview of the incoterms

Please note that this is only a rough overview of the Incoterms. For a comprehensive description of the Incoterms, please visit the website of the International Chamber of Commerce.

EXW - Ex-Works (ex works)
The seller must ensure access to the goods at another named location (e.g. factory, factory, warehouse, etc.). The buyer organizes the loading and the transport and bears the costs and risks.

FCA – Free Carrier (free carrier)
The seller must deliver the goods to the buyer's carrier at a location specified by the buyer (for shipping or collection). The seller also undertakes the export customs declaration. The buyer assumes the risk from the moment the goods are handed over to the carrier.

FOB – Free on Board (free on board)
The seller assumes all costs and risks until the goods have been loaded onto the ship. The seller is also responsible for export clearance. The buyer takes responsibility as soon as the goods are on board.

CIF – Cost, Insurance And Freight (Costs, insurance and freight to the port of destination)
The seller assumes all costs and risks until the goods have been loaded onto the ship. The seller bears the costs for packaging and postage for export. The seller also takes out insurance against the buyer's risk of losing or damaging the goods during carriage.

DAP – Delivered At Place (delivered named place)
The seller assumes the costs and risks for the transport of goods to an agreed address.

DAT - Delivered at Terminal (delivered terminal)
The seller must make the goods cleared for import available to the buyer at the terminal of the named port of destination at the agreed time.

CPT – Carriage Paid To (freight paid by)
The seller must make the goods cleared for import available to the buyer at the terminal of the named port of destination at the agreed time.

DDP – Delivered Duty Paid (duty paid free)
The seller delivers the goods to a destination at his own risk and expense. He takes care of all the formalities and bears all costs and import duties.

CFR – Cost and Freight (cost and freight)
The seller assumes all costs and risks until the goods have been loaded onto the ship. The seller has to conclude the transport contract and bears the costs and freight for transporting the goods to the named port of destination or import terminal

CIP – Carriage And Insurance Paid To (freight and insurance paid by)
The seller delivers the goods to the carrier or another person named by the seller to an agreed location. The seller bears the costs and risks for the transport to the specified destination, as well as for the freight insurance. The buyer regulates the import handling and import taxation.

FAS – Free Alongside Ship (free alongside ship)
The seller delivers the goods to the carrier or another person named by the seller to an agreed location. The seller bears the costs and risks for the transport to the specified destination, as well as for the freight insurance. The buyer regulates the import handling and import taxation.

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Incoterms

What are incoterms?

Overview of the incoterms