Vietnam stops importing sugar when prices low, imports when prices high

Just one month ago, when the world’s prices were low, sugar refineries affirmed that no need to import sugar. Now, when the world’s prices increase, they believe that it is necessary to import sugar.

In May 2011, the Vietnam Sugar and Sugar Cane Association affirmed that the sugar stocks were big enough to satisfy the domestic demand until the next crop. It, representing sugar companies, proposed to stop importing sugar and call on to take actions to prevent illegal sugar imports.

Now, it is the association which has proposed the Ministry of Industry and Trade to allow importing sugar, explaining that Vietnam’s sugar has been exported in masses to China, thus leading to the short supply.

The controversial information has made importers worry about the short supply, while they have pushed the sale prices up to seek profits. In the domestic market, the sugar prices have been escalating in accordance with the world price increases. The average wholesale price has increased by 1500-2000 dong per kilo over one month ago.

In mid May 2011, the Vietnam Sugar and Sugar Cane Association sent a dispatch to the Ministry of Industry and Trade, asking to stop importing sugar, though import quotas had been granted. The proposal was approved by the Ministry of Industry and Trade.

At the conference reviewing the 2010-2011 crop, the association’s representatives said that the sugar prices dropped from 20,000 dong to 16,000 dong per kilo in early May. They also said that sugar refineries had been struggling to sell sugar due to the massive sugar imports, both through official and illegal channels.

Also according to the association, the inventory sugar volume of refineries by May 15 had reached 685,709 tons. With the average consumption of 120,000 tons a month, the above said supply would be big enough to satisfy the domestic demand for five months, until October, when sugar refineries in Mekong Delta enters the 2011/2012 production season.

The association has also affirmed that the illegal imports in 2011 may reach 200-300,000 tons, which will badly affect the production and the market stabilization. This will not only create big difficulties for sugar refineries, but also push farmers against the wall.

However, just one month later, the association has changed its mind, believing that it is the right time to import sugar.

The association said that since April 2011, hundreds of thousands of tons of sugar have been exported to China across the border gates, and have been exported illegally, which may lead to the supply shortage.

The association has warned that if the current situation continues, the domestic prices would increase, thus badly affect consumers’ benefits, and that the inventory volume would not be big enough to meet the domestic demand.

Asking for the permission to import sugar is not a surprise, especially when 130,000 tons of sugar in the quotas granted before by the Ministry of Industry and Trade has not been imported.

However, the problem is that Vietnam decided to stop importing sugar when the world’s prices were low, and wants to import when the prices increase. Meanwhile, wise businessmen would purchase when the prices are low to store.

The sugar price in the world is now hovering around 730 dollars per ton. If counting the transportation fee and other expenses, the sugar would have the price at 900 dollars per ton when docking Vietnam’s ports.

The inconsistency in the reports by the sugar association has been facing criticism from the public. Just one month ago, the association affirmed that Vietnam would have sugar in excess. It did not say anything about the illegal exports to China, but only mentioned the illegal imports through the southwestern border gates.

Meanwhile, Doan Xuan Hoa, a senior official of the Ministry of Agriculture and Rural Development, said that since the domestic prices have increased, the sugar exports to China have decreased, and that the stocks are big enough to help stabilize the domestic market until October.

Analysts have pointed out that the proposal to import sugar is just a “trick” played by the sugar association. The association understands well that even when the ministries allow to import, no one would make import deals at this moment, when the prices increase. – TBKTVN

Tags: Vietnam sugar imports