TRADING

For decades, we have been trading in agricultural products, with a focus on the by-products of sugar production, in particular molasses and beet pulp pellets.

Lately, the dynamics of international trade and the flow of goods have changed considerably.

Ethanol

With the growing awareness of climate change, the use of molasses in ethanol production has increased since the turn of the millennium, as ethanol, as a biofuel, can replace fossil fuels.

This has led to significant potential export volumes, particularly of sugar cane molasses, no longer being available as they were increasingly used for ethanol production.

At the same time, more intensive intra-European trade in sugar beet molasses developed.

This sustainable practice helps to reduce the ecological footprint and dependence on fossil fuels.

The local production of ethanol from molasses also strengthens the agricultural value chain and supports rural areas.

Using molasses in ethanol production helps protect the climate, as burning ethanol releases fewer greenhouse gases than fossil fuels.

In addition, the local production of ethanol reduces transport distances, which offers further environmental benefits.

Developments in international trade and the increased use of molasses in ethanol production thus have both ecological and economic impacts on agriculture and the energy sector.

Other Uses

Molasses is used in various applications worldwide, particularly in animal feed production and in various fermentation processes. In the animal feed industry, molasses is valued for its high-energy content and palatability. It is used as an additive in mixed feeds, improves feed intake and binds dust, which is particularly beneficial in cattle, pig, and horse feeding.

In fermentation, molasses is used as a raw material for the manufacture of products such as citric acid, yeast, and alcohol. Its high sugar content provides ideal conditions for microbial growth and the production of biotechnological products.

Sugar Sector

The sugar sector is subject to considerable political regulation worldwide, as sugar is a basic foodstuff and an important source of energy in many countries. Political decisions in large sugar-producing countries therefore have a direct impact on the global market for by-products such as molasses.

In addition, geopolitical tensions and conflicts in certain regions lead to disruptions in supply chains. This can affect the availability of products and increase logistical costs, which in turn has an impact on global trade flows and pricing in the sugar sector.

Regionalization

We assume that the regionalization of the agricultural business will increase, particularly within Europe. In addition to reducing the carbon footprint through shorter supply chains, recent years have shown that the reliability of deliveries and contract fulfillment are higher if crisis regions and extremely complex supply chains are avoided. Added to this is the EU's EUDR program, which makes it much more difficult to record raw materials in many countries.

The EU regulation on deforestation-free supply chains (EUDR) aims to keep products associated with deforestation off the European market. This impacts raw materials such as soy, cocoa etc. The introduction of the EUDR will entail a considerable bureaucratic burden for all market participants, as they will have to implement a comprehensive verification system with due diligence declarations.

Even though, the EU Commission has postponed the introduction of the EUDR by twelve months to give the players concerned more time to prepare. The new date of application is therefore 30 December 2025 for large and medium-sized enterprises and 30 June 2026 for small and micro enterprises.

The EUDR is part of the European Green Deal and is intended to help reduce emissions by at least 55% by the end of 2030 and achieve net-zero emissions by 2050.

Risk Management

In light of these developments, it is increasingly crucial for raw material consumers to secure their supply chains. Achieving this necessitates a deep understanding of markets that can swiftly shift from surplus to shortage. Implementing strategic procurement practices, such as supplier diversification and risk management techniques, can enhance supply chain resilience in volatile markets.