PARIS, Sept 26 (Reuters) - A sharp fall in the quality

of France's wheat crop due to excess rain will lead to

additional costs for starch makers just as the industry is still

suffering from low demand and increasing competition from

imports, they said on Thursday.

Starch and its derivatives, made from wheat, maize, potatoes

and tapioca, are used in products from ice cream to cosmetics,

paints, pills and cardboard due to their sweetening, thickening

and texturizing properties.

The French soft wheat harvest, set to be the lowest in 40

years due to excess rain, has also showed poor quality levels,

including very low and heterogeneous specific weights, a measure

of the size of grains.

"The smaller grains will pose challenges at the industrial

level in our factories that will not be easy to resolve,"

Marie-Laure Empinet, head of French starch producer group USIPA,

said at the lobby's general assembly.

Small grains have less starch and more cellulose, which is

more aggressive for machines and can clog filters. The lower

level of starch also means more co-products to handle, she said.

The additional work and potential damage to machines

will increase the risks of slowdown, breakdown or replacement,

Empinet said.

The four starch companies in France, which include French

producers Tereos and Roquette and U.S. giants Cargill

and Archer Daniels Midland ( ADM ), have decided to lower their

standards and accept smaller grains that would have been turned

down in a normal harvest, she said.

The additional costs and problems come after starch makers

in Europe had already been forced to reduce output and halt some

factories due to a drop in demand in the past year.

The French starch industry's turnover rose 17% to 3.9

billion euros ($4.35 billion) in 2023 due to higher prices but

volumes dropped significantly, with falls of 12% for the food

sector and 18% for the non-food industry including

pharmaceuticals, chemistry, and paper.

Results for the current year were still very uncertain with

a rebound in demand still very timid, costs that remain at high

levels and strong competition from imports which rose 13% last

year to 1 billion euros, USIPA said.

($1 = 0.8965 euros)