CSM claims that the proposed closure of its beet processing operations in Breda, the Netherlands is a direct result of EU sugar reforms.
All beet production will be carried out at CSM's factory in Hoogkerk in the province of Groningen.
The company claims that the decision has been prompted by the proposed radical changes to the EU sugar regulation and a need to retain the profitable position of CSM's sugar operations.
Europe's sugar regime has come under fierce criticism for distorting sugar prices, currently trading at three times the world price in Europe. Under the new plans sugar users would no longer be obliged to buy from within national borders and between EU members - as is currently the case - allowing them to source from competitive markets and ultimately buy cheaper sugar.
The 25 EU member states still have to approve proposals, but the plan from Agriculture Commissioner Franz Fischler tabled in mid-July to the Parliament is for a one-third cut in the institutional sugar price rolled over three years and starting from the 2005-6 campaign. The move has been welcomed by food manufacturers, who see the changes as leading to a much more liberal sugar trading structure.
These proposed changes to the EU sugar regulation will likely lead to lower sugar prices and production quotas. So by concentrating the sugar beet processing in one factory CSM believes it will considerably improve efficiency and create an excellent starting position for itself in the further consolidation of the European sugar industry.
CSM says that it is only the beet processing operations in Breda that faces closure. The speciality factory that produces liquid and novelty sugar will continue, as will storage and distributionoperations.
Nonetheless, dismissals will be requested for approximately 75 of the 150 employees in Breda.A large number of efficiency projects will be implemented in the Hoogkerk factory to optimise business processes. In addition, some of the machinery from the sugar factory in Breda will be moved to Groningen in the next few years.
CSM Suiker says it will draw up a social plan for the affected employees. Individuals and unionshave been notified, and the Works Council has been asked for advice.
CSM's main product groups after the intended divestment of its sugar confectionery activities will be bakery ingredients and products, lactic acid and derivatives, and sugar. With these activities, CSM will have an annual turnover of €2.8 billion and a workforce of approximately 9,500.