EU sugar reform to impact local operations for enzyme leader Novozymes

Number one food enzyme supplier Novozymes likely to move production to the US and China as a result of the new EU sugar reform, the daily Berlingske Tidende reports.

Citing Novozymes chief executive Steen Riisgaard, the Newspaperwrites that although the new EU sugar reform will gradually lower sugar prices, it will also remove the export subsidies, which Novozymes receives for its finished products.

The Danish firm buys about 15,000 tonnes of sugar every year for the use in the yeast process of microorganisms.

Reform to the European sugar regime, that sees sugar in the EU bloc trading at three times the world price, is imminent.

Earlier this month the Commission proposed a raft of measures to modernise the regime, including a 39 per cent price cut over two years.

Reform is generally expected to hit sugar and sweetener suppliers, but bring cost-savings to food and drink producers who will be able to buy a key formulation ingredient at knock down prices.

For Novozymes, changes to regime are set to benefit its foreign subsidiaries more than the mother organization in Denmark, reports Berlingske Tidende.

The reforms, which could eliminate an export subsidy while simultaneously maintaining a high sugar price, mean that Novozymes can produce less expensively in countries such as the US and China, where sugar can be purchased at world market prices.

Further, adds the report, a reduction in EU sugar prices will cost Novozymes an extra DKK 40 million (EUR 5.36 million) annually, as the company will also lose a sugar-related export subsidy.

Steen Riisgaard, CEO of Novozymes, said his company would benefit most if the price of sugar in Europe were allowed to float freely, cites the newspaper.