At the recent conference in Ho Chi Minh City reviewing the sugar cane crop year 2010 - 2011 and the sugar industry development orientation in accordance with Decision 26 of the Government, the Sugar Association said the sugar industry is facing many deadlocks like the quantity of smuggled sugar and sugar for export to China, and the growth of manufacturing industries using sugar as raw material, such as milk and candy industries.
Lost in host market
The Vietnam sugar industry is facing many difficult problems, such as many factories having no stable raw material areas, leading to competitive purchasing and acceptance to buy sugar in mass, regardless of impurities and low sugar content. The purchasing price of sugar cane is very high while the quality of sugar canes supplied for factories is very poor. Because of those problems, Vietnam sugar is losing its competition against smuggled products.
Experts said that the impurity in raw sugar cane is now seen as a serious problem. Raw sugar canes supplied to factories are even mixed with waste. Meanwhile, sugar businesses are complaining, the level of losses in harvesting sugar canes accounts for 20 to 30 percent of possible production.
Raw materials are also considered the greatest difficulty for which the sugar industry must find the solution. Since 1999, there has been no mutation in productivity and quality of sugar canes. Thus, cultivating sugar canes is less efficient than other crops, and the raw material areas of factories have always been volatile. Having the same idea, Mr Phan Huy Thong, Deputy Director of the Cultivation Department affirmed that the productivity of sugar cane in recent years has achieved nearly 60 tonnes per ha, but in fact, the processing productivity of the sugar crop year 2009 - 2010 was only 51.7 tonnes per ha. The cause of this decline in productivity is that farmers still use up to 60 percent old seed.
Due to competition from other crops, concentrated sugar cane regions were significantly reduced in area, especially in the northern central provinces and Mekong Delta provinces. For example, in the pressing crop of 2009-2010, total sugar cane yield in the northern region was only about 2.52 million tonnes, down 300,000 tonnes compared with the previous one. Based on this, the Ministry of Agriculture and Rural Development assumed that there will hardly be enough raw materials to meet the pressing crop of the year 2010-2011.
According to Mr Nguyen Thanh Long, Chairman of Vietnam Sugar Association, the sugar industry is facing problems with smuggled import sugar. This is a worrying situation and unequal competition. Currently the amount of sugar smuggled from Thailand, through Cambodia to Vietnam in the southwest border is up to several hundred tonnes daily. Meanwhile, it does not include the sugar remaining in circulation. By 15 June 2011, the amount of remaining sugar in the warehouses of processing factories was 347,700 tonnes. One kilogram of smuggled sugar is now VND2,000 – 3,000 cheaper than domestically processed sugar because of evading taxes. Therefore, the domestic sugar prices are low (around VND18,000 per kg) but businesses cannot increase the price of sugar because they will not be able to compete with smuggled sugar in case they increase the prices.
The authorities have difficulty solving smuggling. The smuggling of sugar across the southwest border is happening in a rush and in various forms. So, the struggle against smuggling sugar is always in a state of deadlock.
One of the blatant problems in the gathering warehouse across the border is that smuggled sugar under the hands of illegal traders will be extracted into the packages of the domestic firms. If unfortunately the authorities discover this, the smugglers only have to produce red bills to prove their purchases from domestic sugar mills, and this sugar is automatically considered legal.
Unattainable targets
Decision 26/2007/QD-TTg approved the development plan for sugar cane by 2010 and orientations to 2020, in which the setting targets in 2010 are the following: area of sugar canes was 300,000ha, the average productivity was 65 tonnes per ha, the average sugar reserve was 11CCS, the yield of sugar canes was 19.5 million tonnes, the total capacity of factories was 105,000 tonnes per day, and the yield of industrial sugar reached 1.4 million tonnes. However, by the end of June 2011, the cultivated area of sugar canes nationwide was only 271,400ha (negative 9.5 percent), productivity was 60.5 tonnes per ha (negative 6.9 percent), the average sugar reserve was 9.8CCS (negative 10.9 percent), the yield of sugar cane was 16.4 million tonnes (negative 15.9 percent), the total capacity of factories was 112,200 tonnes per day (positive 6.8 percent), and the yield of sugar industry reached 1,150,460 tonnes (negative 17.8 percent).
Until 2011, among these indicators, only the total capacity of factories exceeded set targets with 105,750 tonnes per day. This explains why in 2010 Vietnam had to import 200,000 tonnes of sugar. Besides, the quality of sugar cane and the yield of sugar in the country is not as high as in other countries in the area, which limits the competitiveness of Vietnam sugar with other countries.
Mr Bui Ba Bong, Vice Minister of Agriculture and Rural Development (MARD) proposed that the sugar industry increase productivity in growing and processing sugar canes. This proposal was opposed by the businesses because raw material resources are scientifically and frugally planned. The development of the raw material areas is fragmented and unfocused. Mechanisms to import equipment for harvesting and processing are still inadequate. In particular, most businesses complain that the sugar industry has not given any criteria for determining input quality, which makes manufactured products vary in quality. This is why Vietnam sugar cannot be exported.
To improve this situation, the Cultivation Department requested that the immediate task to improve sugar cane yield to meet the next pressing crop is that local authorities and sugar companies need to give guidelines to growers to strengthen technical measures in production and to intensively cultivate sugar canes for raising productivity, so that sugar canes can compete with other crops when the prices of sugar decrease. The businesses must share benefits with the sugar cane growers, and have appropriate encouraging policies to invest like capital support and material support for production.
Ha Linh
Vietnamese
