Ministries cross paths on sugar policy

Whilst the Ministry of Agriculture and Rural Development (MoARD) is striving to push the sale of domestic sugar, the Ministry of Industry and Trade (MoIT) insists on importing sugar.

While MoARD wants to protect local sugar refineries and farmers, MoIT has been supporting food processing companies and customers that prefer foreign made sugar.

According to MoARD, the country had only eight sugar factories operating in the central and Central Highlands provinces by the end of April.

These factories produced 1.03 million tons of sugar from 11.3 million tons of sugarcane, up by 163,200 tons compared to the same period last year.

The ministry said that due to sugar imports, the sale of domestic sugar has slowed and the country currently has about 500,000 tons in stock.

According to the ministry, if MoIT allows the import of the entire quota of 250,000 tons for this year, imported sugar will destroy the domestic sugar market.

On the other hand, MoIT claims that the total volume of sugar produced during this sugarcane crop is about 1.1 million tons, 200,000 tons more than the previous crop. However, compared to the local demand for sugar, the country is still facing a shortage of 200,000 tons.

Meanwhile, local enterprises have imported 29,000 tons during the first three months of the year, 2,000 tons less than the same period last year.

MoIT says the volume of sugar available presently does not meet the local demand. Besides, the demand for sugar will rise in July and August, when confectioneries will want sugar to make moon cakes for the Mid-autumn Festival. Hence, there might be a sugar shortage at that time.

At a meeting between the two ministries on the sugar issue, Nguyen Loc An, deputy head of the Domestic Market Department under MoIT, said the quantity of sugar imported was very small, so it has not affected consumption of domestic sugar as local factories have complained.

Therefore, he said, MoIT was determined to keep the sugar import quota of 250,000 tons unchanged for this year.

Mr. An said MoIT would create favorable conditions to push consumption of domestic sugar. The ministry will ask importers to reschedule delivery of sugar until July.

Sugar prices remain high

Mr. An said refineries have seen a decrease in global sugar prices, so they are worried that domestic sugar prices will drop as well. In addition, they have had to pay a high interest rate of 21-22 percent on bank loans, while their warehouses are full of stock.

Because of these reasons, they wanted to seek the support of the Government to boost the sale of their sugar. He added that farmers are not affected by the import of sugar as was widely rumored.

He said that sugar factories have never shared profits with customers. For instance, when the price of sugar soared up to VND27,000 per kilogram in 2010, sugar makers still expected the price to climb higher so they did not sign long-term contracts to sell sugar to traders and food companies, but sold day by day.

Even now, he said, though refineries have complained of the Government allowing the import of sugar, which resulted in a pileup of 500,000 tons of domestic sugar stocks, retail prices of sugar have not fallen much. They are still at VND21,000-24,000 per kilogram for various kinds.

According to the Vietnam Sugar and Sugarcane Association, the cost price for producing sugar in the Northern region is presently only VND12,000 per kilogram and in the Southern region, VND15,000 per kilogram.

The best quality sugar is trading for VND17,500-18,000 per kilogram from refineries in the Northern region. At these prices, they still enjoy profits, Mr. An added.

He said the country has consumed over 465,000 tons of sugar during the first four months of the year. The figure is much higher than the same period last year. Besides, factories have exported sugar to China.

Therefore, he added, there is no reason for sugar refineries to complain that they have a burden of sugar stocks.- SGGP

Tags: Vietnam sugar, Vietnam Sugar Prices