Moves to sweeten the sugar sector

>> Sugar surplus may be exported

Around 1.6 million tonnes of sugar would be available for sale in 2012, exceeding demands by 300,000 tonnes while the inventory reached 200,000 tonnes right in early crop season, according to Vietnam Sugar and Sugarcane Association deputy chairman Do Thanh Liem.

Besides, more than 200,000 tonnes of smuggled sugar reportedly make inroads into the local market every year. The pressure from illegal sugar imports is forecast to even mount up this year on the back of a Thai bumper sugar crop and shrinking global demand.

For a tonne of sugar stockpiles firms must pay VND200,000 ($9.5) interest per month to banks, according to a Bourbon Tay Ninh Sugar Company representative. Meanwhile the price of sugar fell constantly in both global and local market over the past months.

In this context, before the Lunar New Year the association proposed and in fact got permission from the Ministry of Agriculture and Rural Development (MARD) and the Ministry of Industry and Trade (MoIT) for export 30,000 tonnes of sugar. However, the decision was not yet enacted.

“Export volume must be hiked to 200,000 tonnes for this year, but not just 30,000 tonnes as previously proposed,” said Liem, adding that last year Vietnam sold more than 200,000 tonnes of sugar to China via ‘temporary import-reexport’ method which could badly affect domestic sugar production and exports.

The association’s general secretary Nguyen Hai unveiled some firms had signed contracts to export the product to China, but still could not do so since not getting the MoIT approval.

Can Tho Sugar Company general director Nguyen Thanh Long assumed exporting sugar to China would be a good opportunity for firms to drain inventories out and address capital paucity, hence the MoIT needed to adopt flexible import export mechanisms to moderate the market.

To lessen sugar firm burdens, the association recommended applying sanitation standards towards imported sugar to abate smuggling amount and just granting sugar import quotas from July to November every year.

Besides, Liem suggested applying bidding methods in sugar import management like the case in the Philippines.

Responsive to firm concerns, MARD deputy minister Diep Kinh Tan said the MARD advocated sugar export orientation from before the Lunar New Year and forwarded the proposal to the MoIT while firms’ proposal on hiking export volume  to 200,000 tonnes would need further considerations to avoid affecting the local market in pricing term.

The MARD also suggested the government support in terms of funds and lending interest rates so that sugar mills can maintain stocks to stabilise the market.