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Cane farmers need to decrease costs to reduce sugar smuggling

Update: May, 26/2015 - 08:47

Professor Vo Tong Xuan told Lao Dong (Labour) newspaper that to stop sugarcane smuggling, the country should lower sugarcane production and sugar refinery costs.

Why do you recommend that Viet Nam not expend any more efforts in the fight against sugar smuggling?

The fight against smuggling – particularly sugar – is very dangerous and costly, and it can't eliminate the root cause of smuggling. For sugar, in my opinion, the most sustainable way is not to take any actions against smugglers themselves, but to focus on local sugar production investment. We need to lower its prices compared with the prices of foreign sugar. Seeing no benefits in sugar smuggling, the smugglers will voluntarily give it up. I should say, the same method was applied in the fight against cosmetics and electronics smuggling, and it remains a valuable lesson for us in the fight against sugar smuggling.

Do you mean that we should focus on narrowing the gap in cost and quality between imported and Vietnamese sugar?

That's right. First of all, we should talk about sugarcane production. In many countries, the cost of growing canes is very cheap. In Brazil it costs $16 for one tonne of sugar cane and $18 for one tonne in Australia. In Thailand and Laos it costs $30 per tonne. But in our country, it costs $40 per tonne.

Just look at the cane-growing costs in other countries compared with ours. That explains why our sugar is more expensive than imported sugar. Adding to the cost of our sugar is the distribution cost. That's why cane growers and cane factories have to accept low profit margins. Let's take the case of the price of sugar in Thailand and in Viet Nam in May 2015. One kg of white sugar in Thailand at the cane factory cost about VND8,000 (36 US cents), and was sold for VND15,160 at the supermarket. Meanwhile, in Ho Chi Minh City, the cost of one kg of white sugar was VND12,500 (51 cents) at the cane factory and VND21,500 ($1) at the supermarket.

In your opinion, why is there such a big gap?

In short, it is flaws in the relationship between technical investments and cane planting areas. Viet Nam now has about 38 sugar cane factories. The Cuu Long (Mekong) Delta is the largest cane growing area in our country. But most of the equipment was made in China in the late 1990s.

The cost of growing cane in the delta is very high, as it is a low-lying area. Furthermore, there is only one cane crop a year. In addition, farmers there don't use the cane stumps to grow the next five to seven crops as other countries do. This is a key factor contributing to the high sugarcane costs in Viet Nam. Using advanced technology would also help lower prices.

What should Viet Nam do to ensure our sugar industry catches up with that of other ASEAN members?

In my opinion, the first thing we should do is to help cane farmers gain more from their hard labour.

In the last 40 years, our sugar factories have enjoyed special protection policies from the Government. But in the near future, when the ASEAN Economic Community comes into effect, there will be no more protection from the State. So it's high time the sugar industry introduced advanced technology to sugarcane farmers.

In addition, the Government should encourage these farmers to aggregate their land to make large sugarcane fields to help with irrigation. It should also provide preferential loans so farmers can buy machines for tilling or transporting the canes.

What's most important is that the Government should invest more money in sugarcane research and development. This would help put our cane industry on par with other countries'.­ — VNS

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