Sugar firms in a fix

There are now more than 500 tonnes of unsold sugar stock at businesses who are members of the Vietnam Sugarcane and Sugar Association (VSSA), according to the association’s chairman Nguyen Thanh Long.

The supply outrunning the demand has made the sugar price constantly go down, placing scores of sugar firms in a fix.

In fact, VSSA asked the Ministry of Industry and Trade (MoIT) to export sugar from late last year. But until present, a mere 100,000 tonnes of sugar were shipped abroad, a half of the volume approved by the MoIT for export.

Long from VSSA had attributed the low export volume to Vietnam’s missing ‘golden’ opportunity in exporting sugar and the marketplace hustle-bustle.

“China wanted importing huge sugar volumes in the period before the Lunar New Year and the sugar price fetched high. We asked the MoIT for sugar export but got no feedback. We got the MoIT go-ahead in March 2013 but by that time China’s sugar demand was eased. Besides, Chinese traders have made use of big export volumes to reduce prices,” said Long.

One kg of export RS sugar to China now fetches VND15,000-VND16,000 (72 UScents) only, a level which is reportedly below the production cost of most sugar firms.

General director Do Thanh Liem of Khanh Hoa Sugar JSC assumed besides to RS sugar which got the MoIT’s thumbs-up for exports, refined sugar (RE) was also in glut, the MoIT therefore should also green-light RE exports to help firms drain out stock.

The MoIT was also required to loosen the time for quota-based sugar import and further extend sugar exports deadline to December 2013. (Now it was set before the end of July).

“If firms’ inventories were not effectively tackled, they would not be in a position to support sugarcane farmers in the upcoming season,” Liem said.

When locally produced sugar shows poor sale, illegally imported sugar from Thailand was flowing into Vietnam in massive volumes.

Current legal loopholes have allegedly paved the way for smuggled sugar to do harm to local sugar producers and farmers, as well as threaten consumers’ health.

Accordingly, under current regulations local governments have the right to licence sugar production and trading units.

These units are allowed to produce packaging, print labels and retail sugar packets. Abused of the regulation, traders often transport smuggled sugar in big bags, place labels of local production units on the bags before putting sugar into small packets for retail.

Market watch-dog bodies have often found it hard to exercise sanctions since tracing the product origins proves not simple.

“Albeit An Giang is a hot spot with sugar smuggling cases, we still fail to drive them down due to lacking of necessary evidences,” said deputy director Phan Loi of An Giang Provincial Department of Industry and Trade, and head of the province’s Market Management Bureau.