Sugar surplus threatens mills in Mekong Delta

Ha Noi (VNS)—The increasing popularity of illegally imported sugar threatens to put sugar mills in the Mekong Delta region out of business, says Nguyen Thanh Long, Chairman of Vietnam Sugar and Sugarcane Association.

Illegally imported sugar is sold for cheaper prices than the locally produced sweetener. Every year, 400,000 tonnes of sugar are imported illegally to Viet Nam. But the country is also expected to produce over 1.5 million tonnes of sugar in the 2012-2013 sugarcane crop. As a matter of fact, the country would face a sugar surplus, Long added.

Sugarcane grower Nguyen Thi Phuong from Phung Hiep District, Hau Giang province, which has the largest sugarcane planting in the Mekong Delta region, said that even though this year's sugarcane price was as low as VND 8,000 per kilo, she was not able to sell any sweetener from her eight-hectare plantation.

According to Nguyen Van Dong, Director of Hau Giang's Agriculture and Rural Development Department , sugar mills in the area have been refining an average of 90 hectares of sugarcane per day. So by the end of next month, about 4,700 hectares of sugarcanes will be cut for such production. Farmers will still have 1000 hectares of sugarcane left.

"The flood season has arrived, so the remaining sugarcane will deteriorate. This significantly affects sugarcane growers' income. Many will have no capital to invest in their next crop," Dong said.

Chairman of Hau Giang People's Committee Tran Cong Chanh said authorities and farmers in his area have faced many difficulties in selling sugarcane to sugar mills over the last three years. As a result, his province has been considering shifting from sugarcane planting to rice cultivation. The province has currently grown 14,000 hectares of sugarcane.

General Director of Soc Trang Sugar Joint Stock Company Co Chi Dung said his mill has pressed 14,000 tones of sugarcane stems since early October, but still has 1000 tonnes of sugar in its inventory. Both Ben Tre and Hiep Hoa sugar mills said they face heavy losses. And Nguyen Thanh Son, Director of Ben Tre Sugar Mill, said his mill has lost VND 1,000 for every kilogram of sugar it produced.

The long distance from sugarcane planting areas to mills has made production costs high. The chairman of the sugarcane association suggested that in the future sugar planting areas should be moved closer to mills to reduce transportation and production costs.

At present, in south-eastern Viet Nam, eight kilograms of sugarcane can produce one kilo of sugar, while producing one kilo of sugar in the Mekong Delta requires 15 kilograms. Areas producing low quality sugarcane should grow other crops while areas with high quality sugarcane that are located near sugar mills should expand their plantings, Long suggested.

To stabilize the sugar and sugarcane industry, the market price of sugar should be at least VND 17,000 per kilo. Both growers and producers need to receive help from the banks and those monitoring the markets must deal with the illegal imports of sugar, said Nguyen Van Chinh, director general of Long My Phat sugar and sugarcane corporation—VNS.