(Mr. Franzini poses in front of the Ledesma’s stand in the Tucumán conference)
Tucumán, September 4th. This week, the world conference of the International Society of Sugar Cane Technologists (Issct) is running in Tucuman city, in the north of Argentina, where the sugarcane production and industry in the country are located.
Since there, the Sugar and Alcohol Business manager of Ledesma, Martín Franzini, talked with eFarmNewsAr.com about the present of this industry in Argentina. “Our industry is suffering a non-favorable global context and the domestic economic recession, that plunged the demand since two years ago”, the executive synthetized.
Ledesma, one of the largest companies in the sugarcane business in Argentina have three main channels to commercialize its production: the industrial use, the family consumption, and the alcohol (including the production of ethanol). “We are facing a hard scenario. On the one hand, global prices are down. Sugar prices are 150 dollars per ton below the last ten years average. This situation hinders to export the excedents of the local production, and thus we face an over-offered domestic market. On the other hand, the economic recession has hit the purchasing power of the people, that moved to the industrial demand, for instance, over the beverage and candy industries. Purchases from large companies in those segments slumped 15 to 18 percent due to the sales downturn. Fortunately, the family consumption channel, that represents 40% of our sales, maintained a firm demand, and that represents a relief for the company”, Franzini explained.
But as we went saying from eFarmNewsAr, the biofuels policy of the government are also hitting the sugarcane industry because prices were disengaged from the dollar, and companies operate close to its costs. “In the last years, ethanol prices fixed by the government slumped from one dollar per liter to the current 45 cents”, Franzini worried.
One of the strategies implemented by Ledesma was the diversification of the sugar offers. Now they overturned to the market new and innovative products for the home consumption, like “mascabo” sugar, light sugar or organic sugar. Also, they are exporting 4,000 tons of organic sugar to the US market, and conserve a relevant presence in the Chilean market, supplying 25,000 tons of sugar per year.
Which are the positive factors that could revert the current situation for the sugar industry? The industry is expecting that Energy authorities realize that ethanol plants are collapsing and they correct the prices for the mandatory blend with gasoline. Currently, gasoline must be blended with corn-based and sugarcane-based ethanol at 12% level.
Then, they expected that sugar prices in the local market go up after the harvest concludes, that is to say in the first half of 2020, perhaps helped by a lower sugar cane production this year. “We expect that sugar price climb from 350 dollars per tonne to 500 dollars in the coming months”, Franzini said.
Recently, Ledesma accessed to a millionaire loan to re-program its debts portfolio. “It is a great help for the company, for sustaining its operation. We are confident that we are moving to a better scenario soon”, Franzini concluded.