VCN- Applying science and technology to increase productivity, reduce costs along with developing high value products are the solutions that Vietnam's sugar industry is doing to compete with imported sugar, even illicit sugar.
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Vietnam's sugar industry faces many difficulties in output and competitive pressure from imported sugar products, especially fromThailand. Mr. Pham Hong Duong, Standing Vice Chairman of Vietnam Sugar Association said that there were two main reasons leading to the weakness of Vietnam's sugar compared to Thailand's sugar. First of all, the sugar industry in Vietnam is behind in technology, resulting in lower sugar yields and higher production costs than Thailand. Currently, sugar mills with a capacity of 6,000 tons of sugar per day or more should reduce their input costs, while those with lower capacity will find it more difficult to compete.
The second reason comes from the support policies for the sugar industry. Since 1985, Thailand has had the Law on Sugar. For more than 30 years, Thailand's sugar prices have been steady instead of fluctuating like Vietnam. At the fixed price, for every ton of sold sugar, the plant will allocate to the Sugar Fund 5 Baht (equal to VND 3,500). As a result, Thailand has a stable source of funding to support the farmers. Specifically, for every ton of raw sugar cane, the plant will pay farmers about 900 baht, and an additional150 baht from the fund.
Thailand also funds a great deal for value-added products from sugar cane. Specifically, the cost of purchasing biomass from bagasse in Thailand is currently 13 cents per kWh, while in Vietnam, it is only 5.8 cents per kWh. The ethanol pricing policy for Thai E5 gasoline at this time is favorable for sugar mills. Specifically, the difference between the E5 petrol price and A92 gasoline in Vietnam is currently VND 800 per liter, while in Thailand, the difference is VND 1,500, thereby creating incentives for consumers to use more E5 gasoline. In addition, the Thai Government also funds research and development, with tax exemptions for investments in new technologies.
For some comments about sugar prices in Vietnam being higher than other countries in the region, Mr. Duong said that the above comments they were based on the comparison between the domestic retail sugar prices and the price of illicit sugar in the market. Specifically, the price of sugar in China is currently VND 24,000 per kg, VND 18,000 per kg in Thailand, while the price of illicit sugar in Thailand is about VND 11,200 per kg. Thus, the current retail price of Vietnam is not higher than other countries in the region.
Solutions for sustainable competitiveness
According to the Vietnam Sugar Association, in 2018, the sugarcane industry in Vietnam will have many promising development due to rising world sugar prices. This is because some sugar markets in the world have reduced their yields. However, in order to develop sustainably, Mr. Duong said that the sugar sector needed to be re-examined and oriented towards restructuring so that it can compete with other countries such as Thailand. Specifically, it is necessary to find ways to improve sugar productivity in the field, reduce production costs and have better distribution options to reduce distribution costs as well as intermediate stages of sugar distribution. In addition, the domestic sugar sector also needs help from the Government. For example, the Government may raise the price of biomass, encouraging people to use more E5 biofuel, especially increasing the price difference between E5 gasoline and A95 gasoline. Along with that, proposing measures to support the science and technology, especially sugarcane and mechanization measures to improve productivity, sugar production and the competitive position of the sugar industry.
In addition, the Vietnamese's sugar industry itself needs to change. Major companies and big corporations of Vietnam's sugar industry are also changing very actively. The key change is to increase capacity, reduce production costs, invest more in sugar products to increase added value for the sugar industry. In addition, factories are also trying to create clean, high-value products such as organic and non-organic sugar to better serve the health of consumers. In addition, the sugar sector should raise public awareness about the use of clean, safe and healthy sugar products. "It will help the sugar industry compete in a fair way. Improving its own internal resources with the help of the Government shall make the sugar sector compete against foreign sugar and illicit sugar", Mr. Duong said.
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Recently, the sugar industry has actively cooperated with distribution companies to stabilize output. Typically, the Coca-Cola Association of Vietnam will co-operate with Coca-Cola Vietnam Co., Ltd., which will use 100% of domestic sugar from now to 2020. Earlier, Thanh Cong Corporation signed a strategic partnership with KIDO Corporation. In the coming time, the sugar sector will continue to push for more "handshakes" to stabilize the consumption market, thus stabilizing the production and stabilizing the sugarcane farming.
By Khai Ky/ Hoang Anh