Sugar industry panic as sales plunge

All stakeholders, from sugarcane farmers to processors and traders, are suffering as sugar sales have fallen alarmingly since early October, industry insiders say.


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Harvested sugarcanes being loaded to be taken to a KCP Vietnam Industries Limited factory in Phu Yen Province. 



Pham Quoc Doanh, chairman of the Sugar and Sugarcane Association, said that mills have produced just 10,000 tonnes sugar since October 10, and there are stocks of about 300,000 tonnes.

However, they were finding it difficult to sell even one kilo despite low prices of around VND12,000 (53 US cents) per kilo and increasing demand for production for the upcoming Tet (Lunar New Year) holidays, he added.

Doanh said firms appeared to be waiting until early 2018 to purchase sugar at even lower prices. Under the ASEAN Trade in Goods Agreement (ATIGA), from 2018, there will be no cap on sugar imports from member countries, with import tax rate at just 5 per cent.

Currently, sugar imports within and outside set quotas are imposed tax rates of 5 per cent and 80 per cent, respectively.

Doanh said he was worried that if sugar prices fall even further, producers, especially small-sized mills, might be forced to shut down. Most mills in the country are small- and medium-sized ones, with 22 of 41 having capacities of less than 3,000 tonnes per day and only eight that can produce more than 6,000 tonnes per day, according to the association.

The current situation was difficult not just for sugar mills; millions of farmers and workers in the industry were affected, Doanh said.

Sugarcane is cultivated on more than 300,000ha across the country, involving 330,000 households, or 1.5 million farmers, and 350,000 workers, he said.

If sugar sales remained low, mills would find it difficult to keep buying sugarcane at VND800,000 ($35.5) to VND1.1 million per tonnes, he said.

Doanh admitted that many sugar producers have been slow in increasing their competitiveness although ATIGA was signed in 2009.

The association had previously proposed to the Prime Minister that the time for implementing ATIGA’s commitments be deferred from 2018 to 2020 or even 2022, with import quota increasing by 10 per cent. It had also proposed that the tax rate for sugar imports out of quota be reduced to 40 per cent for raw sugar and 45 per cent for refined sugar.

The association had also suggested the establishment of a sugar development fund, and the imposition of import quotas on countries such as Brazil, Australia and India, besides ASEAN member countries.

Farmers are preparing to harvest the 2017-18 sugarcane crop. The 41 plants in the country produced more than 1.2 million tonnes of sugar from the 2016-17 crop.

In the first nine months of this year, Viet Nam exported 43,000 tonnes of sugar for $20.6 million to 28 markets, according to the association. — VNS

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