High inventory, the sugar industry is in trouble

In the world market, the sugar supply is rising sharply, while in the domestic, the sugar inventory is high. All this has pushed the sugar industry into a difficult situation.

The limitations of not useing mechanization in production and low productivity are the main reason why the sugar industry has a weak competitive position. Photo: Nguyen Thanh.

Mr. Nguyen Quoc Toan, Deputy Director of MARD’s Department of Agro Product Processing and Market Development said: The world sugar supply is in surplus. As of March 1, 2018, according to World Sugar Foundation: the sugar output of 2017 - 2018 is 179.4 million tons, increasing by 11.1 million tons compared to the same period in the last year.

Meanwhile, the domestic situation is not very positive as the sugar inventory form 2017 is quite large, over 314,000 tons, in addition, the new crop is in production.

Notably, the current price of Vietnam’s sugar processing is higher than countries in the region and in the world. Specifically, Vietnam’s sugar price is about $US 50/ ton, while the price in Brazil and Thailand is $US 16/ ton and $US 30/ ton, respectively.

According to the Vietnam Sugar Association, currently, the country has 41 sugarcane processing factories, small and medium scale is popular. Only 8/38 have a capacity of more than 6,000 ton sugarcane/ day. Meanwhile, a normal plant must have a capacity at least 6000 tons sugarcane/ day to have advantages of scale.

Some experts think that the major reason makes the high price of sugar in Vietnam; reduced competitiveness is the high price in raw materials. Meanwhile sugarcane prices account for 70-80% of the sugar price.

In fact, the difficulties of the sugar industry are not new. Over time, the Vietnam Sugar Association has sent petitions to the Prime Minister and related ministries and branches such as to the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development.

The main issue is about the non-renewal petition for the permit for temporary import for re-export of sugar and the petition for delaying in the implementation of commitments under the ASEAN Trade in Goods Agreement (ATIGA) on sugar...

However, regarding this issue, some experts point out that not all sugar companies are in difficulty. In fact, there are some units such as Thanh Thanh Cong Group, Quang Ngai Sugar Joint Stock Company that have changed and gained success. The way that these companies have achieved this is by applying active contact with farmers as well cooperating with foreign countries to improve their processing ability, improve seed quality and diversify products.

About this issue, Mr. Toan also said: "The enterprises must lift themselves up, they cannot just depend on the protection of the state."

According to Deputy Minister of Agriculture and Rural Development Ha Cong Tuan: The story is, should we protect the sugar industry as the request of the Vietnam Sugar Association or should we let some enterprises go bankrupt?

"Vietnam has 300,000 hectares of sugarcane, in the future, how to maintain it? If we support, what should we do for the industry as it is impossible to prohibit the imports of all commodities, it is impossible to impose taxes, which is not in accordance with international commitments, trade agreements, etc. These are very big issues. We are also listening to opinions from localities, scientists... to get the right direction", said Deputy Minister Ha Cong Tuan.