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Sugar surplus deals bitter blow to traders

Update: May, 13/2013 - 10:20
Workers package sugar at Son Duong Sugar JSC. Sugarcane crop year 2012-13, the country's sugarcane output reached around 1.5 million tonnes, while national demand stood at 1.1 million tonnes and the amount of sugar exported from the beginning of the year reached just 25,000 tonnes. — VNA/VNS Photo Vu Sinh
HA NOI (VNS)— The local sugar inventory has snowballed to a record high of over 600,000 tonnes, according to Chairman of Viet Nam Sugar and Sugarcane Association (VSSA) Nguyen Thanh Long.

VSSA said for the sugarcane crop year 2012-13, the country's sugarcane output reached around 1.5 million tonnes, while national demand stood at 1.1 million tonnes and the amount of sugar exported from the beginning of the year reached just 25,000 tonnes.

By May 3, sugar refineries' inventories had reportedly reached 579,818 tonnes. Adding the inventories of trade companies which are members of the sugar association, estimated at 28,000 tonnes, the total inventory exceeded 600,000 tonnes.

VSSA admitted it will be hard to clear the stock before the new crop is ready at the end of August.

Furthermore, with a global inventory of 5.86-6.18 million tonnes, world sugar prices have also been on the decrease.

On May 1, white sugar was being traded at US$501.2 per tonne, but the price fell rapidly to $496 per tonne on May 3 and continued down to a nadir of $487.2 per tonne on May 9.

With high inventories, the price cut is easy to understand. However, retail sugar prices remain unchanged despite the drop in wholesale.

According to the Ha Noi Supermarket Association, white sugar retail prices in the capital still stood at VND21,000-22,000 ($1.005-1.053) per kilo despite wholesale prices at factories falling to VND15,600-16,600 ($0.75-0.8) per kilo.

In some markets and retail shops, the prices even reached VND24,000 per kilo. So, prices for consumers were VND4,000-5,000 ($0.19-0.24) higher than wholesale, even VND7,000 ($0.33) per kilo in some instances.

This price behavior is due to the fact that the factories have no formal distribution networks and prices are controlled by middle men traders, said representative of VSSA in Ha Noi, Ha Huu Phai.

To ease this situation, VSSA and the Department of Agro-forestry Processing and Salt Industry under the Ministry of Agriculture and Rural Development will this year establish a joint decree on sugar and sugarcane management that will clearly stipulate sugarcane growth planning and policies to protect the profits of both farmers and producers, he said.

On the other hand, the Government needs to develop measures to fight sugar smuggling which is damaging the domestic sugar industry.

Sugar should be added to the list of commodities not allowed for temporary import for re-export to combat trade fraud, he recommended. — VNS


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