Imports undercut sugar mills

January 23, 2013 | 14:22
Sugar producers in the Cuu Long (Mekong) Delta provinces are losing huge profits to illegal imports of Thai sugar, which is being sold at VND500,000 ($24) a tonne lower than domestically produced sugar.
Sugar is packaged by workers of the Thoi Binh Sugar Mill. Local producers cannot compete with illegal imports from Thailand because they must ensure sufficient profits for cane farmers.

Local producers cannot compete with the Thai imports because they must ensure sufficient profits for factories and sugarcane farmers, according to the Viet Nam Sugarcane and Sugar Association.

An average of 400,000 tonnes of sugar have been illegally imported yearly for several years, representing about 30 per cent of the total sugar sold in domestic markets, according to Nguyen Thanh Long, chairman of the association.

The Market Management Bureau in southwest An Giang Province, where Thai sugar crosses the border, said it had been able to prevent only minor cases of sugar smuggling.

Farmers in Kien Giang and Hau Giang provinces in the Delta are facing losses as the local departments of Agriculture and Rural Developments have demanded that they sell sugarcane to sugar factories.

But the association has also told farmers to not raise prices as factories were suffering financial losses. The factories fear that higher prices could lead to a drop in market demand.

Long told the Viet Nam Economic Times that the factories were selling sugar at VND13 million ($623) per tonne, while production costs were VND14 million ($671) per tonne.

Farmers are now rushing to harvest their sugarcane to sell to factories because they believe that buying prices could fall even further.

Meanwhile, factories have more than enough sugarcane on hand and are stockpiling sugarcane in the provinces of Long An, Ben Tre, Soc Trang and Tra Vinh.

Nguyen Hoang Ngoan, deputy general director of Casuco sugar company, said that factories, to avoid losses, could buy sugarcane at lower prices from farmers, but many farmers would then refuse to plant sugarcane in the next crop because of low profits.

As the Tet holiday nears, the smuggling of Thai sugar continues. But authorities have not been able to control the illegal activity at the border with Cambodia and Viet Nam.

VNS

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional