The Croatian Sugar Industry (HIS) company confirmed on Wednesday that this year sugar would be produced only at the Zupanja sugar factory while the sugar factory in the eastern city of Osijek would cease production after the factory in Virovitica had also halted production.

HIS management board chair Zeljko Zadro said that of the 202 workers of the Osijek Sugar Factory, 81 had already agreed to the termination of their contracts and would receive severance pay.

Talks are underway with some of the workers to continue working at the Zupanja factory, while some 30 workers will continue working in the Osijek factory’s warehouse, bakery and silo, while some might  find employment in the Zito Group, which owns the Osijek Sugar Factory.

HIS was founded in 2019 as a result of the merger of the sugar factories in Osijek, Virovitica and Zupanja.

Asked by reporters if this was the end of the sugar industry in Croatia, Zadro said that “it’s a miracle we survived until 2020.”

“Halting sugar production in Virovitica and Osijek was a difficult decision but it is the only one that guarantees that we will keep sugar production running in Croatia. Had we not made it, all three sugar factories would be closed next year,”  he said.

Zadro added that last year there were problems with contracts for the sowing of sugar beet, with contracts having been signed to sow sugar beet on around 10,500 hectares in Croatia and 1,500 hectares in Hungary.

He said that HIS warned at the time that the area sown with sugar beet would suffice to keep only one sugar factory running but that HIS would invest additional effort to make it through another year.

“We hoped that sugar prices would rise, that contracts would be signed for more hectares but unfortunately, the harvest is near and none of that has happened. Since 2014, all three sugar factories, in Virovitica, Osijek and Zupanja, have lost about a billion kuna. We simply had to do this… to at least keep one factory running,” said Zadro.

He noted that the British LMC company, the world’s best known consultant for the sugar industry, had suggested that production costs would be the lowest at the Zupanja factory.

He could not say if, considering the situation on the market, the suspension of production in Osijek was for good.

“We do not know if an agreement with Mercosur countries will be signed, to enable the import of raw sugar in Croatia, which would make it possible to open all three factories. It’s difficult to say what will happen, we have to be flexible and adapt to the situation but unfortunately we no longer have any reserves,” he said.

Asked what should be done to increase sugar production in Croatia, Zadro said that in the old EU member countries an average 18,000 hectares of land is sown with beet per factory, while in the new EU members the average is 12,000 hectares, and he believes that with 12,000 hectares of land sown with sugar beet in Croatia and Hungary, Croatian factories could have a certain future.

Asked if the sale of factory premises in Virovitica and Osijek was being considered, Zadro said that the infrastructure in question was large and that it required careful consideration of steps to be taken next.

“You can start any production here because it can develop considering the available infrastructure. I do not know the answer to that question for now, and we have not discussed the topic with anyone yet,” he said.