Rescue decision gets a mixed reaction

VILNIUS - A plan approved by a Lithuanian court has cheered up beet farmers and sugar plant workers but annoyed Lithuania's major sugar industry investor, Denmark's Danisco Sugar. A Lithuanian Appeals Court decision supports solving the factory's dismal financial situation but Danisco representatives said it will only push modernization efforts backwards.

Marijampoles Cukrus, a sugar plant in southwestern Lithuania, is in financial peril. Weighed down by millions of dollars in debts, its days of sugar producing seemed numbered. Local sugar-beet farmers and factory workers, who see their own economic future tied to the plant's ability to function, occasionally picket to drive home the fact that jobs are at stake.

But a savior came in the form of Arvi, a local fertilizer producer, which created a rescue plan. With agreements to postpone payment of tax debts and a 10 million litas ($2.5 million) local government guaranteed credit line, Arvi intends to get the plant back on its feet.

"The city of Marijampole and the region's mayors requested this of us," Arvi's technical director told the daily Lietuvos rytas.

Danisco, however, has been strongly opposed to the plan and say schemes to keep the collapsing plant afloat will hurt the overall modernization of the sugar industry. Calling the plant's liquidation "an attractive alternative," it was hoping the court of appeals would topple an earlier ruling by a lower court in Kaunas that approved the plan.

"The decision is a victory for the people who don't want modernization of the sugar industry," Danisco said in a statement after the court's decision. "The possibility of rehabilitation of Marijampole Cukrus creates much uncertainty for the future of the sugar industry."

Danisco had planned to invest about 60 million to 80 million litas over the next three to four years in order to increase the capacity in other sugar factories in the country. With the Marijampole factory determined to stick around, Danisco said they would be forced to postpone those investments.

"Without modernization, the sugar industry cannot prepare for the future competition and sugar production will require more protection," Danisco warned. "This can be very dangerous for the future of sugar-beet growing in Lithuania."

But it seems sugar-beet farmers do not intend to be pushed around. At the beginning of October the workers from the Marijampole factory picketed in their town square demanding a favorable decision from the appeals court.

Danisco, however, seemed bewildered at the entire process. In the statement, Danisco representatives said they felt "sorry for the growers in Marijampole who were misled into believing that the rehabilitation plan would be good for them." Last month, Danisco tried to sway farmers by promising a 2 million litas social fund to help those left without work. But the farmers seemed more interested in keeping the plant going.

The Danish company also seemed baffled by the speed in which the appeal was rejected - only two weeks. But Danisco may continue the fight with an appeal to a higher court.