Sustainability is an integral element of AGRANA’s corporate philosophy and one which is put into practice. For AGRANA, this commitment begins long before the industrial processing of agricultural commodities, namely during their procurement. In its Sugar, Starch and Fruit segments, AGRANA processes a total of around nine million tonnes of agricultural commodities per year.
Procurement of raw materials in the Sugar segment
AGRANA’s Sugar segment is active in Central and South-Eastern European markets as well as many EU member states. As a result, a considerable proportion of the business operations of the Sugar segment are subject to the regulations of the EU Sugar Market Regime valid until 30 September 2017.
The main focus of production in the Sugar segment is on the manufacture of sugar products from sugar beet. Around 20 percent of the white sugar produced by AGRANA is obtained from the refining of raw sugar from sugar cane.
Under the EU Sugar Market Regime, the sugar beet for the production of conventional as well as organic sugar at AGRANA’s seven sugar refineries in Austria, the Czech Republic, Slovakia, Hungary and Romania is sourced exclusively from crops grown under contract. For many years, AGRANA has attached considerable importance to providing contracted growers with advisory support based on field research.
Due to the regulations of the EU Sugar Market Regime, the supply of the raw sugar refinery in Romania is dependent on supplies of raw sugar sourced from so-called Least Developed Countries, while the raw sugar refinery in Bosnia | Herzegovina sources its raw sugar on the global market, principally from Brazil.
Procurement of raw materials in the Starch segment
AGRANA’s Starch segment processes mainly corn, wheat and potatoes to produce a wide range of starch and starch-based products for the food processing industry, for technical applications and to make the environmentally friendly fuel bioethanol.
At its starch mills and bioethanol plants in Austria, Hungary and Romania, AGRANA processes around two million tonnes of cereals per year and therefore is a major market player as a result of its purchases of regional surpluses in its key procurement markets of Austria and Hungary.
The procurement of waxy corn, organic corn, organic waxy corn as well as certified GMO-free corn and wet corn is largely based on growing contracts. A proportion of the requirements of ethanol wheat and ethanol triticale are met through growing contracts.
At its potato starch mill in Gmund | Lower Austria, AGRANA processes starch and food potatoes (organic and non-organic) to make puree and dough-based products. Starch potatoes are sourced under growing contracts. The market for potato starch is regulated by the European market regime for potato starch, scheduled to expire at the end of the 2011|12 cereal season in July 2012, which defines production quotas and associated subsidies as well as a minimum price.
Procurement of raw materials in the Fruit segment
The operations of the fruit preparations division of AGRANA’s Fruit segment span the world. Only frozen and aseptic fruit are processed in order to enable production to be independent of the relevant fruit harvesting seasons.
In order to improve the management and tapping of procurement-side synergies, in 2007 the responsibility for purchasing fruit was transferred from the local production sites to AGRANA Fruit Services GmbH. This subsidiary is now the central fruit purchasing organisation for the Fruit segment and active in all major fruit growing regions in a total of 48 countries.
AGRANA’s key global advantage lies in sourcing frozen fruit directly from producers and under contractual growing agreements, which are also increasing in importance in the Fruit segment. Contract growing combined with advisory support for growers increases food safety by means of simplifying quality control and guaranteeing end-to-end traceability in the food chain, a factor which is particularly relevant in the increasing important organic market segment. In order to be able to optimise the commercial, ecological and also the social aspects of the supply chain and their traceability, AGRANA also operates its own processing plants (the first transformation step) in Argentina, Morocco, Mexico, Poland and Ukraine, where the freshly harvested fruit is sorted, cleaned and frozen. Overall, around 40 percent of the fruit processed by AGRANA either undergoes the first transformation step in the group's own facilities or is sourced from exclusive contractual partners.
In order to be able to compensate for vegetation-related variations in harvests from various growing areas, AGRANA's fruit juice concentrate business is constantly searching the globe for new suppliers and regions so as to bolster its independence and ensure that only the best quality fruit is processed. In the fruit juice concentrate segment, AGRANA is successfully striving to tap new sources of raw materials and has set itself the goal of consolidating its strategic position in new growth markets.