The major challenge for the sugar sector on the threshold of integration
Updated : Tuesday, January 02, 2018 5:40 PM (GMT+0700)

The 2016-2017 crop of sugarcane and cassava has just ended and a new crop is about to start in the context of our country preparing for tariff quota removal. Domestic sugar will have to severely compete with imported sugar. Facing the new situation, farmers and factories have to focus on improving sugarcane yield and quality, reducing production costs and product price, which is a really big challenge for peasants and sugar mills in the country.

Sugar processing at Tuy Hoa Sugar Factory

According to the Provincial Executive Board of sugarcane and cassava, the 2016-2017 sugarcane crop, sugar mills and farmers encountered with many difficulties. The long rainy weather caused the factories starting late, which led to the situation of raw material sugar cane not purchased on time; the raw material purchase competitiveness of sugar factories outside the province, sugar prices down, big inventory... However, plants and people have been very efforts to complete the cane crop. In this crop, the plants in the province have collected nearly 1.6 million tons of raw sugar cane. The output of processed sugarcane was approximately 1.3 million tons. The volume of processed sugar reached nearly 130,000 tons. However, the plants only consumed over 81,424 tonnes of sugar, reaching over 60% of processed sugar production. The sugar price this year is quite low, only from 15 million to 16 million for one ton. Sugar factories achieved VND 1,250.6 billion in revenue, up 75.8% from the previous crop.

According to the provincial sugarcane and cassava management board, since January 1st, 2018, the ASEAN Trade in Goods Agreement (ATIGA) will be formally implemented to remove tariff barriers, which is a major challenge for sugar factories in the country. Therefore, the domestic sugar sector has to actively change to respond to the situation. According to Mr. K.V.S.R Subbaiah, after the ATIGA Agreement, Vietnam will have to compete with Thailand, which has the strength of second-line sugar production in the world. KCP sugar plant has been prepared for the situation for a few last years; in particularly, raising the capacity of the two sugar mills up to 11,000 tons of sugarcane per day, the second largest throughout the country. KCP plant also has the products after sugar such as the biomass-power plant project that has been in operation since April 2017. The unit has been also investing in post-sugar processing projects such as ethanol plants, micro-fertilizer plants, etc. to increase sales and prices for purchasing sugarcane. However, on the threshold of integration, the sugar price competition with Thailand will be a major difficulty for sugar mills in the country.

Regarding the difficulties of the sugar sector when implementing the ATIGA Agreement, Mr. Dang Viet Anh expressed: In the 2017-2018 crop, some sugarcane factories in the western region have entered into the squeezing time, the purchase price of raw sugarcane has been down by more than 20% over the previous year and possibly continues to decline. Though, some factories cannot pay for farmers because sugar has not been consumed yet. The reason is that these partners wait for the time of Vietnam integration to buy sugar with the cheaper price. There has been over 400 tons of sugar left throughout the country, which has put a lot of pressure on sugar mills domestically. In addition, if the price of sugarcane is too low, the risk can be farmers cutting down sugarcane, which lead to the loss of raw materials for the plants. It is a very difficult problem for sugar mills. If at this time, the ATIGA Agreement is enforced, it is certainly that no domestic sugar mill can stand, which will affect millions of sugarcane farmers in the country. Therefore, we proposed the Provincial People's Committee to submit to the Government temporarily extending the full opening of the sugar market to Thailand, limiting the sugar import quota from this country;simultaneously, there are preferential policies to support better for the domestic sugar industry to create an equality in the integration period.

Source: Phu Yen Newspaper

Translated by TRINH THUY

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