Imports surgedAccording to data of the General Department of Customs, in 2020, Vietnam imported 1.384 million tons of sugar of all kinds, an increase of nearly 4 times more than the amount of sugar imported in 2019. In particular, the amount of sugar cane imported directly from Thailand into Vietnam is 1.145 million tons, accounting for 82.7%. Not only that, the amount of sugar imported from Malaysia, Cambodia, Indonesia, Myanmar is originating from Thailand (these countries themselves do not have enough sugar cane to produce for domestic demand and all imported from Thailand to have a co form D certificate) making the total imported sugar of Thai origin is more than 1.3 million tons, accounting for 95.7%. Harvesting sugarcane in the Mekong Delta. Photo: HOANG VO
Meanwhile, in the crop of 2019-2020, domestic factories can only process 768,000 tons of sugar, while the 2020-2021 crop is expected to only reach less than 800,000 tons of sugar. Thus, the amount of imported sugar in 2020 has outstripped the domestic production output.
According to the statistics of the Vietnam Sugar Association (VSSA), in the period 2010-2018, the sugar produced in Vietnam is enough to meet the domestic consumption demand. However, from 2019 up to now, due to the decline in the area and production of sugarcane in the country, the amount of sugar produced domestically cannot meet the demand for domestic consumption, and must be converted to import.
The high increase in imports caused the excess sugar supply in the narrowed market, leading to lower sugar prices in the market than production costs. In the past two sugarcane crops, businesses have had consecutive losses, with the rate from 1-2.5 million VND / ton. Specifically, in the crop year 2018-2019, the production cost of 1 ton of sugar is more than 13 million VND, but the selling price is only 10.6 million; In the 2019-2020 season, the production cost is 12.3 million dong / ton but the sale is 11.4 million dong.
According to the report on the results of sugar cane production in the 2019-2020 crop of VSSA, although the price of raw sugarcane has increased (about 50,000-100,000 VND / ton compared to the previous crop), it is still a difficult year for the industry. For sugar, farmers are not interested in sugarcane, leave sugarcane and do not invest in care or switch to other crops, leading to a decrease in productivity, quality and output of sugarcane compared to the previous crop. The total sugarcane area in the crop 2019-2020 decreases by 18.4% compared to the 2018-2019 crop (223,847 ha), to 182,599 ha. Sugarcane production of raw materials put into processing only reached 7,662 million tons, the lowest in 19 recent crops (since the start of recording production data is the 1999-2000 crop), leading to a low number of factories. Best. From 40 sugar factories operating in crop year 2015-2016, to crop year 2019-2020 to 29 factories, in crop year 2020-2021, there will be 4 more sugar factories stopped operating (including Son Duong, Nong Cong, Van Phat and Pho Phong) and currently there are only 25 factories in operation.
Although the sugar mills have tried their best to curb the decline in sugarcane prices in order to maintain raw material areas, but it cannot prevent farmers from abandoning sugarcane and switching to other crops. In many regions, there are many areas of original sugarcane that farmers leave, do not take care of and harvest, due to fear of insufficient revenue to cover expenses.
According to VSSA, one of the current weaknesses of the industry is limited information on sugar production, processing and consumption markets, which in turn leads to incorrect understanding of the industry by regulators. Besides, unhealthy competition due to price subsidies in sugar exporting countries and uncontrolled large volume of sugar imported into Vietnam creates many difficulties for domestic production.
Sugarcane is a multi-purpose plant, in addition to its main product being sugar, sugarcane is also the direct or indirect raw material of many industries such as wine, paper, plywood, pharmaceuticals, bagasse electricity, animal feed, fertilizers from leaves, sugar cane tops, sludge and ash, molasses is used as raw materials in industry to produce biofuel, alcohol, solvent acetone, yeast, citric acid, lactic and glycerin, pharmaceuticals , cosmetics. Currently, in the world, sugar cane is considered as an industry producing a variety of products with different levels. As for Vietnam, it is still not possible to make full use of the above by-products, so the cost of the product is still high, it is difficult to compete with imported sugar.
In order to reduce the cost of sugarcane production, according to Mr. Nguyen Van Loc, General Secretary of VSSA, the most important solution is to promote the application of mesification of sugarcane production and harvesting, to reduce labor costs compared to the current level (accounting for 53%-61%). In order to reduce processing costs, the most feasible solution is to improve equipment, apply automation technologies to reduce labor costs compared to the current level (accounting for 36%-40%), while making more effective use of by-products such as molasses, bagasse, sludge, cane wax to improve the value chain, offset costs, contribute to reducing costs, improving competitiveness in the integration period.
The domestic consumption market determines the narrowing or expanding the sugarcane growing area, as well as the size of the sugar processing block, the income of sugarcane growers. Mechanisms and policies still have many limitations. Farmers still have difficulty in accessing policy information, information on markets, prices, and depending on factories. There is no legal regulation on the rate of profit sharing between farmers and factories. As well as lack of transparency in the assessment of sugar and impurities of plants.
According to VSSA, although Vietnam has implemented the policy of accumulating parcels, accumulating land, planning large sample fields for a long time, the land fragmentation situation is still a problem that cannot be solved overnight. Most of the area of raw cane cultivation comes from farmers with small scale, dispersed and not invested commensurate with the requirements of industrial production, so it is difficult to apply mesification as well as other scientific and technical advances to production to improve sugarcane productivity and quality, reduce raw material production costs, improve the competitiveness of the sugar industry.
Mr. Nguyen Van Loc said that over the past time, the sugar industry is almost “clinically dead”, now it is necessary to rebuild the raw material areas. There should be a suitable farming model in each region, not necessarily a large field. In addition, the consolidation of the relationship between the factory and farmers so that efficiency and good income is the leading factor in the sugar industry today.
The risk of gonorrhea returns
Recently, the balance of world sugar supply and demand is leaning towards a shortage of supply, according to the latest forecast of the World Sugar Organization (ISO), the 2020-2021 season, the world will have a shortage of about 4.8 million tons of sugar. In addition, the Ministry of Industry and Trade issued Decision No. 477/QD-BCT applying anti-semitism and temporary anti-subsidies tax on some sugarcane products originating from Thailand, causing the amount of sugar imported from Thailand under the ATIGA Agreement to slow down, positively impacting the consumption situation and domestic sugar prices. The price of buying sugarcane at the end of the crop 2020-2021 has just been adjusted by sugar factories to increase from 150,000-250,000 VND / ton compared to the previous crop. However, due to the decision to impose anti-semitism and anti-subsidies on sugar imported from Thailand somewhat late, the new sugarcane planting season in most regions is running low, so the sugarcane area in the 2021-2022 crop will be difficult to spike, but after 2-3 more crops, the supply of raw materials cane has been restored, meeting the processing needs for about 23-25 factories. However, the flip side of imposing a defense tax of 33.88%-48.88% with Thai sugar is that the amount of smuggled sugar is likely to increase due to price differences.
According to a Thai sugar industry fraud investigation report conducted by expert Antoine Meriot of LLC International Consulting Company since 2015 (American Sugar Alliance – ASA – ordered), average productivity Thai sugar industry is about 28.3 tons / acre (equivalent to 70 tons / ha) and sugar content is 12% -13%; while Brazil, Australia and the US with yield levels of 32-36 tons / acre (equivalent to 79-89 tons / ha) and sugar content of 13% -14% show that Thailand’s sugarcane production level is still a quite a distance. In terms of production costs, Brazil is the most efficient country with 16 cents / lb, while Thailand is from 18-22 cents / lb.
However, Brazil’s sugar exports have been reduced from 50.3% to 37.6% (from 2009 to 2019) and most of this market share falls to Thailand, accounting for 17.5% of the world market share in the 2018-2019 season. In order to ensure income for sugarcane farmers, on April 21, 2020, the Thai government directly subsidised by approving a financial project to support sugarcane farmers to buy production materials for the 2019-2020 season. The total budget for the project is about 325 million USD. In addition, the Thai government also regulates the domestic ceiling price of VND 17,695/kg of sugar (about USD 755/ton), while the average export price for raw sugar and refined sugar is only $334/ton. In addition, despite joining ATIGA since 2010, sugar items are still banned from importing Thailand for many years. As a result of this fraud investigation, Brazil sued Thailand against the World Trade Organization (WTO) for alleged trade fraud by Thailand.
According to VSSA, this type of sugar “subsidized” by the Thai government is the smuggled sugar that has “devastated” the Vietnamese sugar industry for many years. However, for a long time, most public opinion has been led by the assessment that Vietnam’s sugar industry is poorly produced, so the price is always higher than the world price. Some opinions also question whether to keep the sugar industry or not. Also due to this judgment, at the end of 2018, some sugar companies chose to reduce sugar prices and reduce sugarcane prices to compete with smuggled sugar. Reality shows that such a solution is no different from committing suicide!
Source: nld.com.vn – Translated by fintel.vn