Domestic producers are under pressure from smuggled sugar. (Photo: danviet.vv)Hanoi (VNS/VNA) - Lowconsumption, high inventory and continuously plunging prices mean tough timesfor domestic sugar mills, said chairman of the Vietnam Sugarcane and SugarAssociation (VSSA) Pham Quoc Doanh.
The sugar industry is set to harvestits new crop next month, but it has suffered due to smuggled sugar from foreigncountries.
Doanh said during 23 years of theGovernment’s one-million-tonne sugar programme, this year’s crop has seen themost difficulties.
Low consumption means some sugarfactories are in debt after buying sugar cane from farmers but being unable tosell the refined product for the usual rate.
“One cause of the situation issmuggling, which has been an issue facing the sector for years,” Doanh said.
Although smuggling is not a newproblem, he said it is much worse this year. Smugglers have dominated thedomestic market and smuggled sugar is being sold openly, presenting a challengeto authorities.
At some local shops in the westernprovinces and the central coast, inspectors found smuggled sugar beingdisplayed with Thai labels. The flood of smuggled sugar into the domesticmarket has had a serious impact on the sugar industry, Doanh said.
Although Doanh’s association hasreported the situation repeatedly, the problem has not been solved.
The 2016-2017 crop saw a bumperharvest of over 700,000 tonnes, meaning there was less space in the market forthe following year’s sugar.
Department of Agro-productProcessing and Market Development statistics show that as of August 15, thecountry’s sugar inventory was still 622,000 tonnes – 67,500 tonnes higher thanthe figure at the same point last year.
Industry representatives saidsmuggled sugar from Thailand is usually priced 1,000-2,000 VND lower thandomestic sugar, and production costs in Vietnamese mills are 2,000-3,000 VND higherthan those of factories abroad. This means the domestic sugar industry finds ithard to compete with illegal imports.
VSSA said local sugar factories mustaccept that, in order to compete with smuggled sugar, they will have to selltheir products at lower prices – even if it means lower profits.
Local sugar mills are alreadyselling their products at less than 11,000 VND per kilo, the lowest price inyears.
Pham Quang Vinh, chairman of the CanTho Sugar Company (Casuco), said the lack of control on imports has been aproblem for the industry.
Smuggled sugar is not subject to theimport and value-added taxes, meaning Vietnamese producers have to sell theirproducts under production cost to compete.
Vinh said farmers would be forced tolower price of raw sugarcane. He calculated that with the country’s averageoutput of 15 million tonnes, reducing each kilo of sugarcane by just 100 VND wouldcost farmers 1.5 trillion VND (64.4 million USD) in total.
Dang Viet Anh, chairman of the Son LaSugarcane Company, agreed that smuggled sugar could be sold at so low pricebecause its suppliers evade taxes.
Local sugar could compete if not forthe VAT, so Vinh suggested eliminating the tax for domestic businesses. Itcurrently sits at 5 percent.
An estimated 500,000 to one milliontonnes of smuggled sugar makes its way from Thailand to Vietnam each year.
Sugar firms asked localities andnational authorities to redouble efforts against smugglers.
In addition, they suggested atemporary ban on sugar imports to reduce pressure on local mills.
VSSA anticipates more difficultieswith the 2018-19 crop. They said sugar mills should invest in technologies todiversify their products and lower production costs.
In addition, VSSA suggestedreviewing distribution and sale systems to reduce costs, create loyal customersand simplify trade logistics.-VNS/VNA
VNA
