Sugar industry waiting for new mechanism

The current savior of the sugar industry is the Decree on sugar production and trading that is being put forward for comments by the Ministry of Agriculture and Rural Development and the Vietnam Sugarcane and Sugarcane Association (VSSA).

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New decree on sugar cane will "remove difficulties" for sugar cane production and trading

The draft Decree that the Ministry of Agriculture and Rural Development and VSSA have released for comments has 33 articles and looking at it as a whole, it shows that the remaining problems and the root causes of the difficulties that the Sugarcane industry is facing will be resolved when the Decree is issued.

Regarding the purchase price of raw sugarcane, for a long time, the Ministry of Agriculture and Rural Development and VSSA have jointly issued the purchase price of raw sugarcane for each sugarcane crop. In the 2014-2015 sugarcane crop, the purchase price of raw sugarcane that factories will buy at the field is 10 CCS sugarcane at a price per ton equivalent to the price of 65-70kg of white sugar before tax sold at the factory warehouse.

According to the draft, the decision on the purchase price of raw sugarcane will be decided by the Department of Finance of the provinces that grow sugarcane and have operating sugar factories through consultation with sugar factories and sugarcane farmers. In reality, due to geographical conditions, the production cost of crops in the provinces is different. Therefore, allowing the provinces to calculate the production cost of raw sugarcane will help farmers avoid losses.

In addition, the draft Decree also creates open mechanisms when it stipulates that sugarcane farmers are allowed to choose and negotiate contracts with factories. Similarly, factories are also allowed to choose sugarcane farmers to buy from. For a long time, every time a new sugarcane crop begins, there is a situation where a sugar factory in province A complains why a sugar factory in province B comes to buy sugarcane in province A, while, in fact, factories located in each province should buy raw sugarcane in that province.

With this provision, the Sugar industry has created a market mechanism of "willing buyers and willing sellers", and at the same time eliminated the situation of competing to buy and sell that has long existed in the Sugar industry.

Another highlight of the draft Decree is the issue of raw sugarcane quality. According to the draft, raw sugarcane supplied to factories must meet the national technical regulation QCVN 01-98:2012/BNNPTNT on quality. At the same time, the draft also provides a provision that requires an organization to assess sugarcane quality independently of sugar factories and raw sugarcane producers.

Previously, when factories determined the sugar content themselves, farmers had no choice but to agree. Based on the results of their self-assessment of quality, factories would set a price for buying raw sugarcane. And this led to many cases where sugarcane farmers reacted because they thought that factories determined the sugar content lower than the actual in order to lower the price of buying raw sugarcane.

The regulation requiring independent inspectors will create a fair business environment, where farmers and businesses must comply with signed regulations to offer reasonable buying and selling prices, avoiding "fraud" for profit.

The above shortcomings in recent times have led to many farmers being unable to make a living from growing sugarcane and having to switch to growing other crops, affecting the overall planning of the sugarcane industry.

Meanwhile, sugar factories report profitable business at the end of each year and distribute profits to shareholders. Sugarcane farmers, who contribute significantly to the factories' profits, do not benefit because the raw sugarcane has been sold and the money has been taken.

Many industry experts believe that the above provisions in the draft have demonstrated a comprehensive vision, resolving long-standing problems. Some even believe that this is a draft “for farmers” when it requires sugar factories to distribute profits to sugarcane growers in cases where the selling price of sugar is higher than the expected price at the beginning of the production season.

In fact, in many recent sugarcane crops, the price of raw sugarcane purchased by factories for the following crop is always lower than the previous crop. Many sugarcane farmers cannot survive on sugarcane and there have been many cases where farmers have abandoned sugarcane altogether. Evidence from the 2014-2015 sugarcane crop shows that sugar production was only about 1.4 million tons, down 13% compared to the 2013-2014 crop, due to a decrease in the supply of raw sugarcane to factories.

For many sugarcane farmers who work "one sun, two dews", this is one of the highlights of the decree, demonstrating the humanity and responsibility of the management agency in helping sugarcane farmers receive what they deserve.

According to Chinhphu.vn