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Sugar plants struggling to survive
Dr Ha Huu Phai, Secretary General of the Vietnam Sugar and Sugar Cane Association, said that most sugar plants are now facing big difficulties.
Sugar cane growers in China have stable incomes, while the incomes of Vietnamese farmers prove to be very low. Why?
China has nearly 1.4mil ha of sugar cane, which yields 90mil tonnes of sugar cane a year, which means the average yield of 64 tonnes/ha/year. Sugar plants in China purchase sugar cane for yuan300/tonne, or VND750,000/tonne. Chinese farmers get the turnover of VND50mil for every hectare, and net VND30mil. The figures are quite different in Vietnam.
Farmers can earn VND21.6mil for every hectare of sugar cane, and the purchase price is VND350-450,000/tonne, which means heavy losses for farmers. This has been discouraging farmers, who do not want to make investments in sugar cane anymore.
Chinese sugar plants buy sugar cane for twice as much as Vietnamese plants, but they still make profit. Meanwhile, sugar plants in Vietnam complain about losses though they purchase sugar cane at lower prices. What would you say about this?
China is tens of years ahead of us in the sugar industry. In fact, it once faced the same problem as Vietnam now and it had to shut down hundreds of small sugar plants to focus on bigger plants.
Vietnam’s sugar cane has lower quality, 9-10 CCS, while China’s is 14-16 CCS. One tonne of Chinese sugarcane will yield1.5 times more sugar than a tonne of Vietnam’s.
We cannot say that sugar plants set unreasonable prices to purchase sugar cane from farmers. Most of the plants have raised purchase prices, at VND500,000/tonne on average, which means the same price level as China.
The profit of Chinese sugar plants comes mainly from by-products, while Vietnam’s plants have not paid attention to this issue. Is that true?
Former Deputy Prime Minister Nguyen Cong Tan, who has just returned from China, said that in China, sugar plants spend all the money they get from selling sugar to purchase sugar cane from farmers. The plants get profit mainly from by-products. Sugar cane refuse, which was previously used as fuel to run thermopower plants, is used to make pulp, artificial boards to get more profit.
I personally did not get a chance to see that. However, our association and state management agencies will send a delegation of staffs to China to learn about that.
The sugar industry has been protected by tariffs. Why don’t sugar plants think of reducing production costs to make their products competitive with cheap sugar in the world?
You should know that all countries in the world protect their sugar industries, and the industries have close relationships with the lives of farmers. In Vietnam, sugar companies all have to ‘swim’ alone in the market.
I don’t think that it would be good to protect local production only with tariffs, because low tax rates lead to smuggling. We need measures which make smugglers unable to profit from smuggling. In order to do that, we need to make domestic prices equal to imports.
VNN
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