Sugar sector’s bitter taste

The Philippines’ URC Vietnam Company general director Santa Robles Edwin said the Binh Duong province-based company’s $100 million factories were in dire need of 4,000 tonnes of sugar per month for producing confectionery and beverages.

“We are in big difficulties as local sugar suppliers cannot meet our demand. We have had to stop operation of two out of our seven production chains in Binh Duong and Hanoi,” Edwin said.

At present, URC could monthly buy 1,000 tonnes of sugar from Bourbon Tay Ninh company, 400 tonnes from Bien Hoa sugar company, while other suppliers like KCP, Lam Son and Tate&Lyte had yet to decide to sell sugar to URC due to ongoing stock-taking reasons.

Sugar shortages and sudden price hikes have hit many foodstuff companies including Coca Cola, Nestle and Pepsico.

“We sent out a letter to the Ministry of Industry and Trade (MoIT)  to urgently request a sugar quota,” said Nguyen Khoa My, corporate affairs head of Coca Cola. Meanwhile, Vu Quoc Tuan, a spokesman of Nestle Vietnam said: “We sent quota applications to the MoIT from March but the ministry has yet to give us any feedback.” Also, URC’s request to allow it to import sugar to fuel its production was met by a muted MoIT response in May.

Meanwhile, the Ministry of Agriculture and Rural Development (MARD) recently reported that in the 2011/2012 sugar-cane crop, Vietnam’s sugar volume was over 1.4 million tonnes, of which 1.3 million tonnes was consumed locally. Therefore, MARD had asked the government to approve a plan to stockpile 200,000 tonnes of sugar.

Ha Huu Phai, a Vietnam Sugar and Sugarcane Association expert, said the stockpiled sugar volume was 300,000 tonnes now, excluding several dozen thousands of tonnes of illicit sugar imported from Cambodia and Thailand.

“But why do sugar consuming enterprises often lament that they suffer from sugar shortages amid a redundancy of sugar in the local market? It is simply because they want the MoIT to allow them to import sugar. The price of imported sugar is 20-30 per cent cheaper than locally produced sugar,” Phai said.

He said the MoIT would allow for the importation of 70,000 tonnes of sugar soon under the World Trade Organization commitment, because the 2011/2012 sugar-cane crop had just concluded.

“The problem is that sugar consuming enterprises and sugar suppliers need to jointly negotiate prices and seek solutions to consume locally-made sugar,” said MoIT Deputy Minister Nguyen Thanh Bien.