The sugar industry is 'reviving' but still faces many challenges

Industry and Trade Newspaper reporter had a conversation with Dr. Cao Anh Duong - Director of the Sugarcane Research Institute - to better understand the challenges the sugarcane industry is facing and have effective measures to strengthen the production chain to regain the domestic sugar market.

Can you give us the "big picture" of the sugar industry in recent years and the upcoming sugarcane crop 2023/2024?

Since the Ministry of Industry and Trade issued Decision No. 1578/QD-BCT dated June 15, 2021 applying anti-dumping tax on cane sugar originating from Thailand and Decision No. 1514/QD-BCT dated August 1, 2022 on applying measures against evasion of trade defense measures on some cane sugar products originating from Thailand, imported into Vietnam through Cambodia, Laos, Indonesia, and Myanmar, the Vietnamese sugar industry has gradually recovered.

From sugarcane output of 6.7 million tons of sugarcane and 687.6 thousand tons of sugar in the 2020/2021 crop, it increased to 7.5 million tons of sugarcane and 748.1 thousand tons of sugar in the 2021/2022 crop; 9.6 million tons of sugarcane and 935.1 thousand tons of sugar in the 2022/2023 crop, to 10.9 million tons of sugarcane and 1,147.61 thousand tons of sugar in the 2023/2024 crop.

The 2023/2024 sugarcane crop is the first time Vietnam has achieved a yield of 6.8 tons of sugar per hectare, the highest in the ASEAN region, higher than the other three main sugar producing countries in ASEAN: Thailand (5.98 tons per hectare), the Philippines (4.81 tons per hectare) and Indonesia (4.56 tons per hectare).

Dr. Cao Anh Duong - Director of Vietnam Sugarcane Research Institute. Photo: Provided by the character

What is the current supply and demand situation of the sugar industry , sir?

According to Agromonitor/Viettaders, Vietnam's total sugar consumption demand is currently about 2.18 million tons/ha, of which 40 - 45% is for direct consumption, the rest is through industrial processing products and more than 60% of Vietnam's total sugar consumption demand is in the Southwest, Southeast and Ho Chi Minh City regions.

Regarding supply, according to Agromonitor/Viettaders, the Vietnamese sugar industry currently produces and meets only 39% of consumer demand; 45% is from imported sugar, the rest is smuggled sugar and trade fraud.

The sugar market is in a constant state of oversupply. This is a very unusual situation where sugar cane production, although increasing, has not yet recovered to its previous normal production level, making it almost impossible to sell.

In particular, there has been a boom in imports of high-fructose corn syrup (HFCS) and smuggled sugar originating from Thailand across the southwestern border with Cambodia and Laos. Smuggled sugar, which is essentially dumped sugar, has taken over the already shrinking sugar market due to high-fructose corn syrup (HFCS). Domestic sugar prices have fallen and are low compared to sugar prices in the sugar-growing countries in the region (Indonesia, the Philippines and China).

Up to this point, the impact of dumped sugar on the sugarcane production chain has been extremely serious. Since the end of the 2023/2024 crushing season, almost all factories have been unable to sell sugar produced from sugarcane because the market has been dominated by smuggled sugar.

The situation has reached an urgent alarm level. Because if this situation continues, factories will not be able to consume all the sugar produced before the new crushing season of 2024/2025, expected in November 2024. Not only that, if they sell to clear their warehouses, they will be forced to sell below the production cost, leading to losses and certainly factories will not be able to maintain the sugarcane purchase price for farmers in the upcoming crushing season.

Over the years, the Vietnamese sugar industry has always faced many difficulties and challenges . So, what are those specific challenges, sir ?

The main challenges of the Vietnamese sugar industry in recent years and at present are: International integration in the context of the fluctuating world sugar market due to intervention policies and international trade fraud. The governments of many sugar producing countries in Southeast Asia and neighboring Vietnam have had intervention policies on sugar production and consumption. Among these, there are major sugar producing countries in ASEAN such as Thailand, the Philippines, Indonesia and two countries sharing borders with Vietnam, Laos and Cambodia. The policies applied by these countries have a great influence on the sugar production situation in Vietnam.

The sugar consumption market for sugar produced from sugarcane has been narrowed due to the increase in imports of liquid corn syrup (HFCS). Most of the liquid corn syrup imported into Vietnam is HFCS-55 - a liquid sugar containing 55% fructose and 45% glucose, which is 25-60% sweeter than sugar and has actually taken over the sweetener market share in the beverage industry, causing the Vietnamese sugar industry to have almost no sugar orders from this industry, and the sugar market share in the beverage industry in the 2023/24 crop year has dropped to its lowest level in recent years.

Unhealthy sugar industry business environment: Smuggled sugar and sugar products that violate the law on product labeling and traceability are being dumped and circulated freely, without strict control, causing domestic sugar production, which is the output of sugarcane, to be narrowed, cutting off the sugarcane chain. In addition, there is a phenomenon that some large enterprises that are dominating the domestic sugar market often hold back the price increase, causing sugar prices to be scarce and pushed up abnormally.

The analysis of sugar content by sugar factories is not objective and transparent, and has not created trust with sugarcane growers. Sugarcane growers have almost no voice in negotiating, bargaining or making decisions on raw sugarcane prices.

Vietnam's sugar industry has seen a revival, but many challenges remain. Photo: Tuan Anh

There is information that the situation of smuggled sugar is quite strong, causing many businesses in the industry to face difficulties in production and business?

According to annual statistics, about 600,000 tons of white sugar are traded across the Cambodia - Vietnam and Laos - Vietnam borders.

In essence, the dumped sugar originating from Thailand passes through Cambodia and Laos into Vietnam. This phenomenon has been happening for many years. Before the sugar industry implemented ATIGA in 2020, Vietnam had 41 sugar factories. By 2021-2022, only 25 factories were operating, forcing more than 100,000 farming families to switch to growing other crops.

Many acts of commercial fraud in smuggled sugar have been detected and handled by authorities in all provinces and cities across the country. However, many loopholes are being exploited by illegal traders.

To strengthen and develop the chain in sugarcane production , in your opinion, what tasks does the sugarcane industry need to focus on ?

To ensure sustainable development, the Vietnamese sugar industry needs to have appropriate measures to consolidate and develop the linkage chain in sugarcane production, especially in the context of increasing crop competition in localities. Some orientations for the consolidation and development of the linkage chain in sugarcane production during the crop year include:

Stabilize the income of sugarcane growers on the basis that sugarcane farmers enjoy a guaranteed sugarcane purchase price that covers production costs and makes a profit. At the same time, apply technological and technical solutions to reduce costs and increase productivity.

Apply solutions to support farmers in investing in sugarcane planting and harvesting based on policies to encourage the development of cooperation and association in the production and consumption of agricultural products.

Participate in stabilizing the sugar market because a stable sugar market is an important factor in ensuring the output of the sugarcane-sugar production chain on the principle of ensuring supply for the domestic market, harmonizing the interests of sugarcane growers, businesses and consumers.

Stabilize sugar prices at a reasonable level for consumers and do not let sugar prices exceed those of neighboring countries.

In the context of domestic sugarcane production not being able to meet consumption demand, it is inevitable to import more sugar from abroad. However, the government needs to build a legal corridor to strictly manage and control the source of imported sugar through official channels, in parallel with preventing smuggled sugar and trade fraud.

In particular, regarding the long-term strategic development orientation of the sugar industry, it is necessary to avoid the scenario where we, a country with all favorable conditions to be able to produce and supply enough sugar for domestic consumption, even participating in exports, become a country completely dependent on imported sugar sources like Malaysia, Taiwan (China), etc. today.

It is necessary to control and deal with the phenomenon of sugar dumping that causes sugarcane output to shrink, breaks the sugarcane chain, or the behavior of holding down goods to increase prices, causing sugar prices to be pushed up abnormally high,...

Thank you!

Source: https://congthuong.vn/dang-hoi-sinh-nhung-nganh-mia-duong-van-con-nhieu-thach-thuc-349322.html