Friday, October 19 2018

VietNamNews

Vietnamese sugar mills struggle to compete

Update: September, 28/2018 - 09:00
Domestic producers are under pressure from smuggled sugar. — Photo danviet.vn
Viet Nam News

HÀ NỘI — Low consumption, high inventory and continuously plunging prices mean tough times for domestic sugar mills, said chairman of the Việt Nam Sugarcane and Sugar Association (VSSA) Phạm Quốc Doanh.

The sugar industry is set to harvest its new crop next month, but it has suffered due to smuggled sugar from foreign countries.

Doanh said during 23 years of the Government’s one-million-tonne sugar programme, this year’s crop has seen the most difficulties.

Low consumption means some sugar factories are in debt after buying sugar cane from farmers but being unable to sell the refined product for the usual rate.

“One cause of the situation is smuggling, which has been an issue facing the sector for years,” Doanh said.

Although smuggling is not a new problem, he said it is much worse this year. Smugglers have dominated the domestic market and smuggled sugar is being sold openly, presenting a challenge to authorities.

At some local shops in the western provinces and the central coast, inspectors found smuggled sugar being displayed with Thai labels. The flood of smuggled sugar into the domestic market has had a serious impact on the sugar industry, Doanh said.

Although Doanh’s association has reported the situation repeatedly, the problem has not been solved.

The 2016-2017 crop saw a bumper harvest of over 700,000 tonnes, meaning there was less space in the market for the following year’s sugar.

Department of Agro-product Processing and Market Development statistics show that as of August 15th, the country’s sugar inventory was still 622,000 tonnes – 67,500 tonnes higher than the figure at the same point last year.

Industry representatives said smuggled sugar from Thailand is usually priced VNĐ1,000-2,000 lower than domestic sugar, and production costs in Vietnamese mills are VNĐ2,000-3,000 higher than those of factories abroad. This means the domestic sugar industry finds it hard to compete with illegal imports.

VSSA said local sugar factories must accept that, in order to compete with smuggled sugar, they will have to sell their products at lower prices – even if it means lower profits.

Local sugar mills are already selling their products at less than VNĐ11,000 per kilo, the lowest price in years.

Phạm Quang Vinh, chairman of the Cần Thơ Sugar Company (Casuco), said the lack of control on imports has been a problem for the industry.

Smuggled sugar is not subject to the import and value-added taxes, meaning Vietnamese producers have to sell their products under production cost to compete.

Vinh said farmers would be forced to lower price of raw sugarcane. He calculated that with the country’s average output of 15 million tonnes, reducing each kilo of sugarcane by just 100 đồng would cost farmers VNĐ1.5 trillion (US$64.4 million) in total.

Đặng Việt Anh, chairman of the Sơn La Sugarcane Company, agreed that smuggled sugar could be sold at so low price because its suppliers evade taxes.

Local sugar could compete if not for the VAT, so Vinh suggested eliminating the tax for domestic businesses. It currently sits at 5 per cent.

An estimated 500,000 to one million tonnes of smuggled sugar makes its way from Thailand to Việt Nam each year.

Sugar firms asked localities and national authorities to redouble efforts against smugglers.

In addition, they suggested a temporary ban on sugar imports to reduce pressure on local mills.

VSSA anticipates more difficulties with the 2018-19 crop. They said sugar mills should invest in technologies to diversify their products and lower production costs.

In addition, VSSA suggested reviewing distribution and sale systems to reduce costs, create loyal customers and simplify trade logistics. — VNS

Trade ministry holds sugar auction

HÀ NỘI — The Ministry of Industry and Trade (MoIT) released the results of an auction for 94,000 tonnes of imported sugar on Wednesday in Hà Nội.

Eight firms won bids for 29,000 tonnes of refined sugar. They were Quảng Ngãi Sugar and Lotte Vietnam (500 tonnes each); Sanofi Synthelabo Vietnam Pharmaceutical, FES Vietnam, Unilever Vietnam and Red Bull Vietnam (1,000 tonnes each); URC Vietnam (4,000 tonnes); and Vinamilk (20,000 tonnes).

Only 28,000 out of the 65,000 tonnes of raw sugar received successful bids from Biên Hòa-Ninh Hòa Sugar (2,000 tonnes), two subsidiaries of TTC Group (6,000 tonnes) and VietSugar (20,000 tonnes).

Trần Thanh Hải, deputy head of the ministry’s Import and Export Department, said the council in charge of the auction had received 19 valid applications, with four firms offering bids on raw sugar for the production of refined sugar and 15 others making bids on sugar for food manufacturing.

The auctioned volume comprises 65,000 tonnes of raw sugar and 29,000 tonnes of refined sugar, according to a ministry’s circular on managing import tariff quotas for sugar.

The reference prices for raw and refined sugar were the same, at VNĐ1.4 million (US$60) per tonne.

Speaking at the auction, Deputy Minister of Industry and Trade Trần Quốc Khánh said the ministry had held successful actions for duty quotas of imported sugar in 2016 and 2017.

“Today’s auction was conducted in an open, fair and transparent manner under the supervision and witness of ministries, agencies, associations, enterprises and the media,” he noted.

This is the third time that the MoIT has held such an auction, following the Việt Nam Sugarcane Association’s repeated proposals over the years to open tenders.

An auction was held for the first time in September 2016 for 85,000 tonnes of raw and refined sugar. Eleven businesses won the tender. 

Last year, the auction council permitted businesses to import 44,000 tonnes of raw sugar and 45,500 tonnes of refined sugar. — VNS

 

 

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