In recent years, other plants have also grappled with problems. The Liesti sugar plant, controlled by Russian investors in 2008, merged with that of Urziceni after its turnover had halved in a single year, and retailer PIC, which operated a sugar packaging facility, decided to exit the market shortly before going insolvent.
“The number of sugar plants fell also because of failed privatizations or the post-1990 de-capitalizations,” explains Ioan Armenean, president of the Romanian Association of Beet Sugar Producers (ARPZS).
In the ’90s, Romania had 33 sugar plants, while in late 2009 just nine were left, according to the Agriculture Ministry data, out of which one, Zaharul Bod, entered insolvency, but kept going. The closing of these plans hit small towns, with less than 10,000 inhabitants, the hardest.
On the other hand, the only plants that survived were the ones bought by foreign investors, which injected millions of euros in equipment and retooling, and the results are turnovers of above EUR160 million annually, as in the case of Austria’s Agrana.
“This is how Oradea, Ludus, Roman or Buzau stayed afloat. The Bod plant, which is now in trouble, is Romanian-held,” states Armenean.
The Bod plant continues to operate with 100 employees, 150 fewer than five years ago. “The plant may be put up for sale, but the buyer must pay debts at the level they will be set at; it is hard to believe an investor will be found, though” says Aurel Centu, of Centu SPRL.
The turmoil in the sugar industry also shows in domestic production, which is 40% lower than in 1990. While in 1990 Romanian sugar plants produces 538,000 tons annually, in 2000 production stood at 475,000 tons and in 2009 it slipped to 320,000 tons.
The domestic sugar industry is in the doldrums also because ahead of EU integration Romania negotiated a sugar quota of around 110,000 tons of beet sugar and a quantity of 330,000 tons for raw sugar processing, whereas domestic sugar consumption stands at 550,000-600,000 tons annually.
With the first year after EU integration, the signs of problems of the previous years started showing in sugar producers’ balance sheets, so that the profits of the largest companies on the market, Agrana and Lemarco halved.
Major foreign companies quickly moved in to fill the gap left by struggling Romanian companies.
At present, the top five companies on the market are foreign-held ones, such as Agrana, Lemarco and Zaharul Oradea, with combined turnover of above EUR300 million. Romanian rivals, such as Zaharul Ludus or Zaharul Corabia, lag far behind, with turnovers of below EUR50 million.