Sugar industry is suffering again!

In the past two years, the sugar industry has run out of sweet time when facing the fact that domestic supply has exceeded consumption demand.

In the 2014-2015 sugarcane crop, sugarcane growers in Tay Ninh are losing sleep because 5,000 hectares of sugarcane have been damaged by the four-striped stem borer (new type), and sugar factories are worried because there is a risk of a shortage of raw materials, which will push up the cost of sugar production.

In the past two years, the sugar industry has run out of sweet time when it has to face the fact that domestic supply has exceeded domestic consumption demand by 200,000-300,000 tons per year, not to mention about 400,000 tons of smuggled sugar and trade fraud through border gates, always sold at a price lower than the price at sugar factories by about 500 VND/kg, sometimes even lower than 1,000 VND/kg.

Therefore, according to the Vietnam Sugarcane and Sugar Association (VSSA), there was a time when the amount of sugar sold in the Southern provinces was mainly smuggled sugar!

Sugarcane harvesting machine costs 10 billion VND, harvests 8-9 hectares per day, replaces about 500-600 workers, but in Vietnam there are only 2 of them!

According to Mr. Nguyen Van Thanh, former Director of NIVL Long An Sugar Factory (India), the main reason why the cost of 1 kg of sugar in Vietnam is always higher than other countries in the region is because our raw sugarcane productivity is only around 60 tons/ha, about 70% of the world.

Furthermore, there is always a shortage of raw materials, so many sugar factories never run at full capacity, high machine depreciation and high costs are inevitable consequences.

Therefore, according to a sugar factory director in Tay Ninh, he is really worried, because many sugarcane growing areas in the locality are currently being ravaged by stem borers and there is a phenomenon of spreading to many sugarcane farms.

If the pest situation does not improve in the coming time, surely in the 2014-2015 sugarcane crop, many sugarcane growing households will have a serious decrease in productivity. At this time, sugar factories will not only lack raw materials but also have a decrease in sugar quality.

Meanwhile, the world sugar price situation is not very bright. Last week, the sugar price on the New York Stock Exchange, USA, decreased by nearly 13 USD/ton, to 390 USD/ton, equivalent to about 8.2 million VND/ton, which means the sugar price traded on the market is only 8,200 VND/kg.

Meanwhile, the wholesale price of white sugar (VND/kg, including VAT) at domestic sugar factories in the North is 12,400-12,528 VND/kg; in the Central Highlands - Central region 12,343-12,833 VND/kg; in the Mekong Delta region 12,600-13,100 VND/kg.

The price of smuggled Thai sugar in the first week of September at the southwestern border was 11,800 VND/kg; at Lao Bao border gate, Quang Tri, it was 12,000 VND/kg, in Ho Chi Minh City it was 12,100 VND/kg, equivalent to 3.2-3.4 yuan/kg.

Sugar inventory as of September 10, 2014 at sugar factories was nearly 331 thousand tons, at trading companies under the association was 15 thousand tons.

Thus, domestic sugar prices are 1.5 times higher than world sugar prices. Therefore, sugar factories are now under pressure to further reduce their selling prices if they do not want their sugar inventories to increase.

In addition, pests and diseases are hot on the 20,000-hectare sugarcane area in Tay Ninh, and as Mr. Vuong Quoc Thoi, Director of the Department of Agriculture and Rural Development, said, the province may have to declare an epidemic soon.

Therefore, further reduction of sugar prices at this time by the factories is no different from "suicide", because the cost of sugar production in the next crop (only about 2 months from now) certainly cannot be lower than 13,000 VND/kg, partly due to the above mentioned pest and disease factors.

"Our sugarcane growing area is still quite fragmented. Science and technology and mechanization factors have not been widely applied in the production process, causing waste of fertilizer. In recent years, the movement to pursue "new varieties" has also been too much. The movement of varieties from abroad, from one region to another, has caused quarantine work to not be well controlled, causing difficult-to-treat pests and diseases, and many sugarcane varieties have quickly degenerated.

In addition, manual harvesting and transportation without proper techniques resulted in about 10-15% of sugar being lost, while in other countries this rate is only 1-2%."- (Mr. Nguyen Van Loc, Vice Chairman of the Board of Directors of Bien Hoa Sugar Joint Stock Company).

At this time, sugar factories have only one way out: exporting to China.

However, in reality, in recent years, sugar exports through this market have been very unstable due to frequent border bans.

We learned that currently domestically produced sugar and temporarily imported sugar for re-export to China is around 11,600 VND/kg.

But due to tight control from China and low prices, consumption is difficult, some trading enterprises are now forced to sell off to reduce storage costs.

According to VSSA's report, in the South, during the week from August 30 to September 10, Long My Phat sugar factory entered the 2014/2015 production season.

Meanwhile, Nuoc Trong sugar factory pressed 7,231 tons of sugarcane, producing 780 tons of sugar, up to now, it has pressed 61,042 tons of sugarcane, producing 6,401 tons of sugar.

Faced with the difficulties weighing on the sugar industry, VSSA recently sent a letter to the Ministry of Finance requesting that it impose an indefinite 5% sugar import tax or consider increasing the import tax (to a minimum of 15%) if the import of sugar (or rice) causes difficulties domestically.

According to VSSA, sugar is a price-stabilized commodity managed by the state. At the same time, most countries in the world have put sugar on the list of "sensitive commodities" and are strongly protected. If domestic sugar is not protected, it will "lose" for a long time right at home.

According to NNVN