Sugar industry: Difficulties in the new crop year

(Baonghean) -Although the 2013-2014 crushing season has only begun for nearly half a month, both sugar factories and sugarcane growers are on edge as sugar prices have fallen, causing sugarcane purchasing prices to fall as well. Difficulties continue to plague the sugarcane industry, signaling a difficult production season.

Farmers are fed up

For more than half a month now, sugar factories have begun purchasing sugarcane to start a new pressing season. In many localities in the province, after months of care, people are harvesting sugarcane to sell to factories. Stopping her hand from cutting sugarcane, Ms. Pham Thi Sam, Khe Men hamlet, Dong Hop commune said: “My family has 1 hectare of sugarcane, each year we harvest about 80-90 tons/ha, but this year it is not good because the sugarcane has been left for many years, plus the price of sugarcane is cheap so we do not invest and take care of it like in previous years. Therefore, the sugarcane yield of my family is only about 65-70 tons/ha. Not only that, the sugarcane purchase price at the beginning of the season from the factory is only 80 VND/kg, lower than last year's price. Thus, my family only earns more than 65 million VND from 1 hectare of sugarcane, minus the cost of fertilizer, seeds, labor, and plows, we only make a profit of more than 40 million VND/ha, on average, a monthly income of more than 3 million VND. A whole year with 5 people in the family, just relying on that amount is very difficult.”

Harvesting sugarcane in Tan Ky sugarcane raw material area. Photo: Cong Sang

In Nghia Dan district, sugarcane growers are also fed up with the price of sugarcane this year. In 2012, the price of sugarcane dropped to 87 VND/kg at the beginning of the season, and by the end of the season it was 85 VND/kg. Farmers were “begging for help”, but by this year’s crushing season, the price of sugarcane was only 80 VND/kg, making everyone shake their heads in disappointment. Mr. Nguyen Van Dung, Nghia Trung commune (Nghia Dan) said: “In this commune, almost every household grows sugarcane, more or less, but the price of sugarcane in the past few years has been unstable and has tended to go down, so many families have started to switch to growing rubber trees.

Some others still stick with sugarcane but are not as enthusiastic as before, so investment and care have also decreased a lot. Our people only know how to rely on sugarcane as the main source of income for the family, but now the price of sugarcane is so low that life is greatly affected." Mr. Dung's family has 1.3 hectares of sugarcane, each year harvesting nearly 85 tons. However, due to difficult roads, they have to use ox carts to transport the sugarcane to the factory's collection point. Low prices and other rising costs have caused income to decrease.

Nghia Dan is the district with the largest sugarcane growing area in the province, with more than 8,400 hectares. The sugarcane growing area in the district has increased in recent years due to the decrease in raw material prices of acacia and cassava. However, from 2012 to now, the sugarcane growing area has somewhat stagnated. Although the area is large, the sugarcane productivity of the people is not high, only from 57-58 tons/ha. For the areas purchased at the beginning of the season, it only reached about 51-52 tons/ha. Mr. Le Trung Tam, Head of the Agriculture Department, said: According to the purchasing schedule of Tate & Lyle Sugarcane Factory, from November 15, the factory started issuing orders but the purchasing progress was very slow, up to now, only 50,000 tons have been purchased with an area of ​​about 1,000 hectares. Like last year, the sugarcane purchasing progress lasted until May of the following year, causing the sugarcane to flower. From here, the sugarcane will quickly dry out its tops, dry out its leaves, become hollow, unable to grow, store sugar, and its yield will gradually decrease, causing losses to farmers.

Factory in trouble

Up to this point, all three sugar factories in the province have begun harvesting sugarcane to start the new pressing season. The common point is that the sugarcane purchase price at the beginning of the season of the three factories is at 80 VND/kg. This is considered the lowest price in many years that these factories have applied. Explaining this, Mr. Tran Kim Loc - Deputy General Director of Nghe An Tate & Lyle Sugar Company said: Before applying the sugarcane purchase price to the people, the company based on the sugar price and production cost to announce the floor price in the pressing season. Currently, the domestic sugar price has dropped below 14,000 VND/kg, so the company is forced to purchase sugarcane at that price.

In addition, the situation of smuggled sugar is still rampant in the Southern market, compared to the price of Thai sugar, the price of Vietnamese sugar is still high, so it is more difficult to sell. To improve economic efficiency for people, in addition to investing and improving production line equipment to reduce costs, the company has invested tens of billions of VND for farmers to replace new, disease-free, high-yielding sugarcane varieties, and invested in drip irrigation systems using Israeli technology. Currently, the factory's raw material area is still stable at 18,000 hectares of sugarcane, but the sugarcane yield is higher than 57 tons/ha (2 tons/ha higher than the previous crop). From the beginning of the season, the factory has coordinated with local authorities to direct people to plant in batches, this year the crushing season will be shortened to 135 days. The factory still maintains a bonus policy for sugarcane with high sugar reserves.

At Song Lam Sugarcane Joint Stock Company, since November 13, the company has implemented a new pressing season. In the 2013-2014 crop year, the factory's raw material area is 1,800 hectares, an increase of more than 100 hectares of sugarcane compared to the previous crop year, and the pressing capacity has increased to 1,000 tons/day, an increase of 150 tons compared to the previous crop year. Mr. Le Thanh An - Deputy Director of Song Lam Sugarcane Joint Stock Company said: The sugarcane purchase price will be based on the sugar price, and currently the domestic sugar price is decreasing because cheaper Thai sugar is being sold everywhere, so sugar from domestic factories is difficult to compete. This year, the sugarcane yield is estimated at 60 tons/ha, the area has increased so the sugar production output of the factory will certainly increase. However, the factory is committed to farmers to purchase all sugarcane from the raw material area. The biggest difficulty now is that many raw material routes in Anh Son, Thach Ngan - Con Cuong are degraded, the factory is focusing on maintaining and repairing some raw material routes.

In principle, factories purchase raw sugarcane from farmers based on the formula that the price of 60kg of sugar sold at the factory is equal to the price of 1 ton of raw sugarcane. That is, the lower the sugar price on the market, the lower the price of raw sugarcane will be. It is likely that the price of sugarcane will continue to decrease because currently the price of smuggled sugar in the provinces is lower than the price sold at the factories, thereby leading to a decrease in the price of raw sugarcane purchased by farmers. Although the authorities have implemented many measures to prevent sugar smuggling and trade fraud through temporary import and re-export of sugar, they have not been effective so far. Every year, the amount of smuggled sugar is about 400 - 500 thousand tons and the price is 3,000 - 4,000 VND/kg lower than the domestic price (equal to the amount of evaded import tax and VAT). By natural law, excess sugar leads to a drop in sugar prices, causing factories to operate at a standstill and the main loss falls on the shoulders of sugarcane farmers.

Pham Bang