Sugar industry 'cries for help' before ASEAN Trade Agreement is applied

Mr. Pham Quoc Doanh -The Chairman of the Vietnam Sugarcane and Sugar Association (VSSA) said that for the past 15 days, domestic sugarcane enterprises have not been able to sell their products, even though the sugar price has hit rock bottom at only 12,000 VND/kg.

Proposal to extend the commitment implementation period

The main reason is that businesses that need to use sugar are waiting for another 2 months, in early 2018, when Vietnam officially implements the roadmap for commitments under the ASEAN Trade in Goods Agreement (ATIGA), meaning that countries in the bloc will no longer be restricted from importing sugar into Vietnam, while the import tax rate is only 5%.

Sugar price drops to 12,000 VND/kg, sugar industry "calls for help".

“This is a big challenge for the still weak sugar industry. Although it has not yet “opened up,” smuggled sugar flooding into Vietnam has caused many businesses to go bankrupt,” said Mr. Pham Quoc Doanh.

To resolve difficulties for the sugar industry, VSSA has sent a petition to the Prime Minister requesting to postpone the implementation of commitments within the ASEAN bloc under the ATIGA Agreement until 2022, if earlier than 2020. Instead, the import quota will continue to be increased by 10% compared to 5% in 2017.

At the same time, VSSA also proposed that the import tax rate outside the tariff quota should also be reduced by 50% compared to the previous level of only 40% for raw sugar and 45% for white sugar. "Currently, there are countries that do not implement free trade agreements, but we only dare to propose extending the implementation period of this commitment and still increasing the import tax rate," said a VSSA representative.

Previously, on October 6, the Government Office issued a document notifying the Prime Minister's opinion on VSSA's proposal. Accordingly, the Prime Minister assigned the Ministry of Industry and Trade to preside over, together with the Ministry of Finance, the Ministry of Agriculture and Rural Development and local agencies, to consider VSSA's proposal and report to the Prime Minister before October 30.

However, although the deadline for reporting has come today, it is known that the Ministry of Industry and Trade has not yet completed the report because this unit believes that there are still many different opposing opinions on the proposal to postpone the implementation of the ATIGA Agreement commitment in the ASEAN bloc for sugar products as proposed by VSSA.

According to VSSA, the most disadvantaged people are sugarcane farmers.

The most disadvantaged are farmers.

VASA believes that if the commitment to abolish tariff quotas from 2018 is implemented immediately, the farmers will be the ones who will suffer the most. In fact, in the sugar industry, up to now, the whole country has 41 factories with a total designed capacity of about 150,000 tons/day, an increase of 12.7 times compared to 1995.

According to calculations by international experts, for sugar factories to be able to produce effectively, they need a capacity of pressing 6,000 tons of sugarcane per day, but out of 41 factories, only 8 have achieved this capacity.

VASA believes that in early 2018, if the tariff quota on sugar is removed as committed in the ATIGA Agreement in the ASEA bloc, the scenario that will occur is: Sugar factories with small capacity and outdated technology will face difficulties, and may switch to importing raw sugar for refining and no longer purchasing sugarcane from farmers. By simply importing raw sugar for refining, sugar factories can still maintain production.

However, the most disadvantaged are the sugarcane farmers. “Currently, the sugarcane growing area of ​​farmers nationwide is 300,000 hectares, of which many specialized areas have been formed for high efficiency. If sugarcane enterprises encounter difficulties, they will have to reduce the sugarcane purchase price, unable to maintain the maximum of 850,000 to 1 million VND/ton of sugarcane as it is now. Thus, about 330,000 farming households with 1.5 million workers participating in growing sugarcane for sugar factories will face difficulties,” said Mr. Doanh.

VSSA also said that it has been 15 days since the sugarcane harvest season, but because the factories cannot sell sugar, they have no money to buy sugarcane from farmers. Meanwhile, the labor cost for harvesting sugarcane in the Central Highlands has reached 400,000 VND/person/day, but even if the sugarcane is harvested, the farmers cannot sell it, and if the sugarcane is left in the fields, the sugar reserves will decrease and the purchase price will also decrease. Both farmers and sugarcane enterprises are in a situation of "sitting on fire" waiting for rescue from the authorities.

According to Dan Viet Newspaper