Sugar producers suffer from mounting stockpiles, increased smuggling

Despite higher output, sugar producers in Vietnam are increasingly concerned over rising inventories and illegal imports.

According to the Vietnam Sugarcane and Sugar Association, total sugar output for the 2011-2012 crop was estimated to reach 685,709 tonnes. By the end of April, stockpiled sugar inventories had mounted to 525,000 tonnes.

The association estimated that with national demand of 120,000 tonnes of sugar per month, the stockpiles were enough to guarantee local supply until October. However, illegal sugar imports have been creating problems for producers, the association noted.

“The inventory is not a major cause of concern as it can serve the domestic market for the remaining five or six months of the year,” said Doan Xuan Hoa, Deputy Director of Department of Processing and Trade for Agro-forestry-Fisheries Products and Salt Production (DPT) under the Ministry of Agriculture and Rural Development (MARD).

Hoa, however, sugar traders are burdened by high interest rates that have hindered their businesses.

In the meantime, despite having large amounts of sugar stockpiled, producers feel compelled to maintain production to avoid having a negative impact on the lives of sugar cane growers.

Despite sugar prices being slightly higher, sales seem to be at a standstill, he added.

Ms. Pham Thi Sum, Chairwoman of Bien Hoa Sugar Joint Stock Company, attributed the sugar stockpile to unforeseen market developments.

“When sugar prices are high, producers are not eager to sell their products to traders in the expectation of even higher returns. And then upon falling prices, traders don’t want to buy sugar in large volumes, resulting in the current stockpile,” Sum noted.

She however warned that the country may fall short of sugar in the third quarter of this year due to uncontrolled illegal sugar exports to China.

According to Sum, localities in northern Vietnam illicitly export between 2,000-3,000 tonnes of sugar to China daily.

While locally made sugar is being illegitimately exported, a large volume of foreign sugar has been illegally imported into Vietnam, putting increasing pressure on local producers.

Trinh Minh Chau, the association’s Vice Chairman, warned that illegal sugar imports have become a major national concern. The activity has contributed some VND500 billion (USD24.11 million) in annual losses to State revenue, and affected the trade deficit.

Smugglers often use local producers’ packing for illegal imports, which prevents authorities being able to detect the fraud, he added.

He called for stricter regulations on preventing smuggling in the coming time. – Dtinews

Tags: Vietnam sugar, Vietnam Sugar Prices