Vietnam sees full state exit from sugar mills by end 2017

A farmer harvests dried sugarcane on her drought-stricken farm in Soc Trang province in the Mekong Delta, Vietnam on March 31, 2016. Photo by Reuters

Sugar output in 2015-2016 drops to 1.2 million tons as a drought damaged sugarcane areas last year.

The Vietnamese government has set a target to fully divest from sugar mills by the end of this year, which is aimed at raising the competitiveness of the sugar industry, a local newspaper reported Monday.

The government has started reducing state stakes in domestic sugar refineries since 2014 and at present only has investment in one company, the Vietnam Economic Times newspaper quoted chairman Pham Quoc Doanh of the Vietnam Sugar and Sugarcane Association as saying.

He said the government has planned to sell all its 70-percent stake in the Vietnam Sugarcane and Sugar Corporation II by the end of this year to complete its divestment from the sugar industry.

"Thanks to (the divestment), production and business of the sugar industry will be the fairest compared with other industries," Doanh was quoted by the newspaper as saying.

Vietnam’s sugar industry, primarily based on sugarcane, is considered less competitive than Thailand, which ranks as the world's second-largest exporter of the sweetener.

Doanh said prices and the quality of sugarcane, rather than the processing technology, are placing Vietnam’s sugar industry behind Thailand.

Thai plants are buying a ton of sugarcane at $26 while Vietnamese refiners have to pay $40-$53 a ton, and Thai sugarcane also has a higher sugar content, he said.

Vietnam refined 1.24 million tons of sugar in the cane crushing season that ended September 2016, down 12.7 percent from the previous 2014-2015 season, due to a drought and salination in the southern region. The sugar production year lasts from October to September.

The country's 2016-2017 sugar output has been projected to rise 13 percent to 1.4 million tons, the sugar association has said.