May 31, 2020 00:00

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Vietnamese sugar: "Unsuccessful" in 2019, worried about 2020

13:59 | 02/12/2019

VCN - Ending the 2018-2019 crop year, Vietnam's sugar industry is about to enter a new crop with significant anxiety. This is due to the increasing competition pressure when tariff quotas on imported sugar from ASEAN are officially removed from 2020.  

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Vietnam is aiming to increase sugarcane productivity to 80-100 tons per ha. Photo: collected

Inventory 600,000 tons

Regarding processing, in the crop year 2018-2019, sugar factories have pressed more than 12.2 million tons of sugarcane and produced more than 1.17 million tons of sugar. Notably, inventory at the sugar factories until the end of the crop is about 600,000 tons.
According to the Vietnam Sugar Association (VSSA), at the end of the 2017-2018 season, domestic sugar factories are expected to plan a total sugar area of nearly 240,000 hectares for the plants with a productivity of 68.3 tons per ha, withtotal sugarcane productionreaching nearly 15.5 million tons.However, the actual results of the cropof 2018-2019 are not reached as planned because of the decrease in the area,some areas have reduced by 20-30%.Sugarcane productivity alsodecreasecompared to the plan, reaching only 63.42 tons per ha.

2019 is still a year with high inventories in recent years.Regarding sugar prices, according to VSSA,the current price of sugarproduced in Vietnam is 100,000 to 200,000 VND per ton higher than in Thailand.In addition,VSSA also provides an estimate of the amount of smuggled sugar into Vietnam from 2018 to the end of September 2019 at over 800,000 tons.This amount is equivalent to about 50% of national demand, lowering consumption of domestic sugar, contributing to increasing sugar inventory of enterprises.

“The impact of smuggled sugar reducesprices, sofarmers convert to other crops. That is the main reason leading to the decline in the amount of raw sugarcane. In addition, some drought-hit areas reduced acreage, yield and quality of sugarcane.Some areas affected by pests also impact productivity and quality,” aVSSA representative said.

It can be seen that 2018-2019 is an"unsuccessful" crop for the sugar industry, but difficulties have not stopped there.Recently, the Ministry of Industry and Trade issued Circular No. 23/2019/TT-BCTregulating the non-application of import tariff quotas for sugaroriginating from ASEAN countries, effective from 1 January 2020.

This means that, in just over a month, sugar imported from ASEAN may flood into Vietnam,creating significant competitive pressure on the domestic sugar industry.Even many opinions expressed concern about the collapse of Vietnam's sugar industrybecause it could not overcome this pressure.

Apply trade remedies as needed

Minister of Industry and Trade Tran Tuan Anh saidthat for the sugar industry, Vietnam was the last country inASEAN to open itsmarket for participating countries in the region. In fact, the competitiveness of the sugar industry is very limited due to many subjective and objective reasons.Specifically, the competitiveness and advantages of countries such as Thailand, Brazil, China andIndiaare much bigger than Vietnamese sugar.In addition, the issue of smuggled sugar is becoming a big risk with the increasing scale and sophisticated operations. "This is the responsibility in the administration of the market management forceandthe Ministry of Industry and Trade,"the minister said.

The Ministry of Industry and Trade affirmed that in the future, they would continue to coordinate with the Ministry of Agriculture and Rural Development, relevant State management agencies,the Vietnamese Sugar Associationto study and advise the Government and the Prime Ministerforapplying trade remedies, and import control measures in line with international commitments to ensure fair competition and reasonable protection of domestic production if there is a sudden increase of imported goods leading to lossesfor Vietnamese enterprises.

“The Government has agreed to continue implementing the decision to open the sugar market on January 1, 2020. However, in the integration process, there are mechanisms and legal instruments to ensure the protection of domestic production plans. If imported sugar products into Vietnam pose a serious threat to the domestic manufacturing industry and the interests of domestic peopleafteropening the market,we will have the right to apply defense mechanisms,impose safeguard duties on imported products to protect domestic industries,”Minister Tran Tuan Anh said.

In order to enhance the real internal force of Vietnam's sugar industry, from the perspective of the agriculture sector, the head of the agriculture sector Nguyen Xuan Cuong said that the solution groups proposed by the Ministry of Agriculture and Rural Development are coordinating with the Vietnam Sugar Associationin focusing on reviewing the stages of sugarcane production; restructuring sugar plant.

For example, with the seed stage, the goal is to try to cover 100% of the area to push sugarcane productivity from 66 tons per ha up to 80 - 100 tons per hain the shortest time of about 2-3 years.

Regarding the factories,there are 41 factories with a total reserve of nearly 2 million tons,of which only 31 factories have a capacity of 3,000 tons per day.Therefore, the sugar industry must consolidate to ensureenough factories with a certain strength, scale,and competitiveness of capacity.

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In addition, according to Minister Nguyen Xuan Cuong:“It is very important that the value chain of the sugarcane industry must be longer. We must make good use of this value chain.In addition to sugar products, this industry has manyby-products such as bagasse which have not been fully utilized.”

By Thanh Nguyen/ Binh Minh