Sugar sector needs solution for balancing supply and demand

Gagthering sugar-canes

Vietnam has quite many sugar mills but only a few of them are competitive enough.

According to the Vietnam Sugar and Sugarcane Association (VSSA), among 37 sugar mills with a total capacity of 75,850 tonnes of sugarcane per day, there are only six with an average capacity of 4,500 tonnes/ per day.

Despite sugar price hikes in the world market, domestic sugar producers saw a sharp decline in the recent sugar crop.

VSSA Chairman Le Van Tam said the competitive capacity of the Vietnamese sugar sector is very low compared to many countries in the region and the world and sugar price hikes have led to sugar smuggling.

Mr Tam warned that if a solution for reducing sugar prices is not devised soon, sugar mills will face a lot of difficulties when Vietnam removes protection barriers for the sugar sector.

In addition, Vietnam’s agricultural productivity and industrial processing output are lower than other countries in the region, at an average level of 50 tonne/hectare/ year.

In the 2005-2006 sugar crop, the country produced only 820,000 tonnes of industrial sugar and 150,000 tonnes of unprocessed sugar (380,000 tones lover than the set target).

In the next sugar crop, total sugar output is predicted to reach 1.23 million tonnes, still short of 100,000 tonnes to meet the set target. Therefore, it is essential to work out a solution for balancing sugar supply-demand.

Material supplies remain the weakest point of the sugar sector. To solve the problem, greater efforts should be made by both farmers and businesses with support from the State in line with a long-term comprehensive strategy.

In the 2006-07 sugar crop, the country has grown 290,000 hectares of sugar canes, up 25,000 ha. If farmers are provided with technical tending skills, the sugar sector will likely to reap a bumper crop of high-quality sugar canes, helping to reduce the volume of imported sugar.

According to the Development Strategy Institute under the Ministry of Planning and Investment, to stabilise the domestic market and sharpen its competitive edge, the sugar sector needs to upgrade and modernise production lines, introduce new technologies and enhance management skills to reduce cost production. In addition, the sector needs to utilise favourable conditions and human resources to expand the production scale, diversify products, and develop satellite production units to better serve the domestic sugar sector.

For its parts, the Price Control Department under the Ministry of Finance should also better manage the prices of sugar products. Accordingly, relevant agencies should properly forecast price fluctuations in the domestic and world markets so as to balance supply and demand in different parts of the country. The Ministry of Finance has proposed that the State provide further support for the sugar sector in case the purchasing prices of sugar products fluctuate within 30 days.

Source: VOV