Sugar industry could be sweeter with restructuring

HÀ NỘI – The domestic sugar industry should restructure all stages of its production process towards diversifying products to improve competitiveness, according to the Ministry of Agriculture and Rural Development.

Farmers harvest sugarcane in the southern province of Sóc Trăng. — VNA/VNS Photo Trung Hiếu

At a meeting between the ministry and the Việt Nam Sugarcane and Sugar Association (VSSA) in Hà Nội this week, minister of agriculture and rural development Nguyễn Xuân Cường said that to improve the competitiveness of the sugar industry, "production cost must be reduced at all stages."

“Besides that, the association and businesses need to pay special attention to mechanisation, irrigation, organic farming, cooperation models in production, new cooperative models and diversification of products made from sugarcane products,” Cường said.

“Those solutions would make products with high quality and low production cost for the industry’s sustainable development in the future.”

The ministry will accompany the association and enterprises to promote the production of sugarcane varieties to meet demand on the varieties of farmers, thereby raising Việt Nam's sugarcane productivity to 90-100 tonnes from 50-60 tonnes at present, he said.

The ministry, the Ministry of Science and Technology and VSSA are likely to cooperate in developing quality standards and regulations for the sugar industry.

VSSA chairman Phạm Quốc Doanh said the sugar industry, especially sugar mills, are facing difficulties due to the lowest price of sugar in the past 20 years. Climate change and tariffs under the ASEAN Trade in Goods Agreement (ATIGA) effective from January 1, 2020 also create pressures on the industry.

Therefore, VSSA has proposed to the Government and ministries a series of solutions to overcome the existing difficulties, Doanh said.

It is necessary to focus on restructuring the sugar industry to improve its ability in competitiveness and market integration by 2030, he added, pointing out a major task is restructure of material production to reduce price and production costs.

In addition, solutions need to pay attention to restructure variety production, aiming at supplying all sugarcane varieties with high quality and productivity for farmers after 2020.

That will stop an existing situation that farmers themselves keep sugarcane to be varieties in the next crop, making reduce quality and productivity year by year, according to the association.

The industry should use innovate farming measures, production organisation, management of quality and price and technology for production.

VSSA has proposed the Government permit only the import of raw sugar for refineries and have mechanism of granting import licences for monitoring the volume.

The association has asked the State to stop bids on the right to use duty quota to import sugar this year.

It has also suggested the Ministry of Industry and Trade find solutions to deal with the elimination of tariffs on sugar products under ATIGA from 2020. The ministry should propose defense or anti-dumping measures for sugar imports in case the tariff elimination creates negative impacts on domestic production.

Meanwhile, the Ministry of Finance is asked to propose to the National Assembly adjustment and supplementation of special consumption tax at 12 per cent on imported High-Fructose Corn Syrup (HFCS), or liquid sugar extracted from corn, damaging the domestic sugar industry.

Việt Nam has 36 sugar factories with a total capacity of 150,000 tonnes of sugarcane per day, an increase of 12.7 times compared to 1995. The total sugarcane area in the country is about 300,000 ha, an increase of about 10 times compared to 1995.

Every year, the industry produced about on average 1.5 million tonnes of sugar, earning about VNĐ300 trillion, meeting the domestic demand and stabilising price on the domestic market.

However, according to VSSA, the 2018-19 sugarcane crop is the third consecutive year under impacts from weather climate, prices, domestic and international markets and losses of many factories and companies in the 2017-18 crop.

All 36 sugar-processing factories have entered the production season this year and until March 15, they have produced 750,000 tonnes of sugar. Meanwhile, sugar price is still low of VNĐ10,500 per kilo of white refined sugar due to big inventory from the last crop.

Meanwhile, liquid sugar imports have continued to increase to 140,000 tonnes in 2018 from 46,000 tonnes in 2014.

In the 2018-19 crop, output reached about 14 million tonnes of sugarcane, processing about 1.3 million tonnes of sugar, lower than from the previous crop.

Those figures are expected to fall 5 per cent to 13 million tonnes of sugarcane and 1.25 million tonnes of sugar in the 2019-20 crop against the previous crop.