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Locally made sugar threatened by imports
Vietnam-made sugar is now in danger: the productivity decreased over the previous crop, farmers tend to chop down sugar cane, while illegal imports are threatening to dislodge local products from the home market.
According to the Ministry of Agriculture and Rural Development (MARD), the total sugar productivity in the 2007-2008 crop was 1,249 tonnes, a decrease of 2,000 tonnes over the previous crop. The ministry has estimated that the sugar output, plus 94,000 tonnes in storage and 58,000 tonnes of imports, will be enough to meet the domestic demand.
The biggest problem now for sugar plants lies in the fact that massive illegal imports have come, which is threatening to dislodge locally made sugar from the home market.
According to the Vietnam Sugar and Sugar Cane Association, the world’s sugar price is now at low level. Therefore, when other kinds of farm produce are increasing in prices, the sugar price does not increase.
White sugar price is now selling at VND7,500-8,000/kg, with which enterprises cannot get enough money for re-investment, while they are facing big difficulties with material area development. Besides, as there exists the big gap between the world’s and the domestic price (VND2,000/kg), illegal imports have been flocking into Vietnam in large quantities.
Sugar plants have also decreased their sale volume. Statistics showed that the sugar sale volume in May and June decreased by 30-50,000 tonnes compared to the average level. By the end of June 2008, the sugar volume in stocks at sugar plants had reportedly reached 320,000 tonnes.
Also according to the Vietnam Sugar and Sugar Cane Association, the most redoubtable rival of locally made sugar is the sugar imports under the quota scheme under WTO and AFTA commitments, and illegal imports from Thailand. The imports will become big threats to local sugar industry, if the world’s sugar price decreases to overly low levels as it did in late 2007.
Do Thanh Liem, General Director of Khanh Hoa Sugar Company, said that sugar companies are facing big difficulties. He said that sugar cane growers have become puzzled as the sugar cane price does not increase, while the prices of other kinds of farm produce all have been increasing sharply. Meanwhile, the bank loans’ interest rates have been staying firmly high, making it more costly to grow sugar cane. Analysts have warned that the sugar cane productivity will decrease dramatically in the 2008-2009 crop as farmers will not inject money in sugar cane any more.
As planned, sugar plants will operate at full capacity by 2010; however, the current material supplies still cannot meet the demand of plants.
MARD has estimated that by 2010, Vietnam will have 300,000 ha of sugar cane. If the plan on 300,000 ha of sugar cane is fulfilled, Vietnam will have enough materials to run sugar plants and will not have to scramble to purchase sugar cane from farmers as they now have to any more.
VNN
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