Sustainable Solutions for Sugar Cane Industry

11:24:23 AM | 7/29/2014

According to calculations, the cost of sugar cane production industry of Vietnam is the highest in the world. The competition will become increasingly fierce when the tax rate hits of 0 percent by 2015 when some important international trade agreements are concluded. If a timely and effective solution is not found, thousands of households and businesses in the sector will be miserable.
It is the opinion of Mr Nguyen Trong Thua, Head of the Department of Agro-forestry-fishery products and salt production (Ministry of Agriculture and Rural Development) in the International Workshop on solution for cost reduction in sugarcane production to higher income for farmers, which has taken place recently.
According to Mr Nguyen Van Loc, Chairman of the Vietnam Sugarcane Commission, there are now more than 310,000 hectares of sugarcane. From 2009 - 2010 crop year to present, the country's sugarcane output has increased steadily, reaching an average of 200,000 tonnes per year. Particularly in 2013 – 2014 crop year, sugar production reached the record of 1.6 million tonnes. In this crop, sugar productivity reached the highest level ever of 5.47 tonnes a hectare. However, there exists an adversity that Vietnam’s sugarcane yield is only half as much as that of the world. Explaining this issue, Loc said that the reason for that adversity is that the majority of sugarcane areas of farmers as well as most businesses remain fragmented and lack of focus. The elements of science and technology and mechanization have not been applied in the manufacturing process, which causes waste in fertilizer. In addition, recently, there has been a trend of using too many new kinds of sugarcane. The moving of sugarcane varieties from one region to another has made quarantine not well controlled and breeds rapidly degenerated. In addition, manual harvesting and transport which does not follow proper technique has made loss for 10-15 percent of the sugar, while this percentage in other countries is only 1-2 percent.
Mr Loc added that comparing competitive advantage in this industry between Vietnam and Thailand, the gap is quite large. Specifically, while the cost of land rent is higher in the South-East of Vietnam than in Thailand, Thailand has lower fertilizer costs, higher sugar yield and lower sugarcane purchase price. In Thailand, they harvest sugar at foot with no impurities; ripe sugarcane is with no exposure time and transported by mechanical means so the loss is just under 5 percent. In Vietnam, farmers harvest young sugarcane by hand; transport time reaches 24-48 hours and 15-20 percent of sugar in sugarcane is lost. These factors have increased the price; therefore there must be solutions to reduce production costs and increase productivity so that Vietnamese sugarcane can be able to compete.
According to Mr Loc, the issue of development plan of Vietnam’s sugarcane industry is that the price is too high while competitiveness remains low. Although in 2013-2014 crop year sugarcane yield has reached 64.2 tonnes a hectare on average, only 10 percent of material area reaches the level of productivity of the region and currently 42 percent of the raw material areas of Southeast region is at risk of turning into other crops due to low sugarcane yield. One important reason is that existing sugar processing industry in Vietnam is still too backward, leading to low productivity. Currently, Vietnam's sugarcane yield is only 5.47 tonnes per hectare while in Thailand and Australia it is 8 and 12 tonnes per hectare, respectively. These restrictions have led to limited income for Vietnamese farmers. Specifically, according to the Vietnam Association for Sugarcane, sugarcane profits of the Southeast region and the central Highlands is VND5,16 million and VND8,432 million per hectare, respectively while it is VND20,645 million per hectare in Thailand.
As an expert, Prof. Dr. Vo Tong Xuan said that the present solution reducing costs by mechanization in irrigation (the most important stage to improve the productivity of sugarcane) is deploying automatic sugarcane irrigation system. Accordingly, we can possibly learn experiences from Nuoc Trong Sugarcane Corporation which has invested in low voltage systems to areas and used electric motors in each cluster. At the same time, they also set drilling wells in sugarcane fields to bring water to irrigation system by underground wire. In addition, farmers and businesses need to calculate when applying science and technology in choosing sugarcane breed for stable development of the material areas.
Anh Phuong