The illegal import and oversupply of sugar has been a big headache for the Vietnamese sugarcane sector, according to the Vietnam Sugarcane and Sugar Association.
The illegal import of sugar remains rampant (Photo by Petrotimes)
According to the Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production, in the 2012-2013 period, Vietnam has a total sugarcane area of 298,200 ha, up 15,000 ha compared to the last crop. The country’s average sugarcane output is estimated at 63.9 tonnes per hectare, up 2.2 tonnes per hectare.
Vietnam has 40 sugar refineries now operational, with a combined capacity of 1.53 million tonnes of sugar in this crop, up 224,000 tonnes against the last crop, including 700,000 tonnes of refined sugar.
Due to the oversupply, sugar prices in the 2012-2013 crop are from VND1,500 to VND2,000 per kilogramme lower than the level of the last crop.
According to Doan Xuan Hoa, Head of the Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production, by July 15 this year, the total sugar inventory amount at sugar factories was 426,000 tonnes, higher by 187,000 tonnes than at the same time during the last harvest.
The supply is higher than the demand, which means a lot of pressure on the sugar factories. Without good operations management, the oversupply will be even greater, leading to a price crisis and consequent losses for producers as in previous years," Hoa added.
Do Thanh Liem, Deputy Head of the Vietnam Sugarcane and Sugar Association said, "Vietnam is facing, on a daily basis, illegal importation of sugar from the South Western border area, i.e. Cambodia and Thailand." He disclosed that traders often land the illegal sugar by conveyor belt with between 50 and 100 tonnes of sugar per boat put ashore, then taken to riverside warehouses.
This illegally-imported sugar is then taken to sugar production establishments in An Giang Province and Can Tho City and then legalised with local stamps before being transported to other localities to be sold.
When facing checks by the authorities, traders show all necessary papers related to the batch. Despite knowing about the illegally-imported sugar, authorities do not have enough legal foundation for confiscation, Liem said.
He noted that the sugar quality of different factories is likewise different, therefore, it is difficult for authorities to control the mixture quality. Sugar businesses buy a small amount of sugar from local producers and then they use papers related to that transaction to show authorities to cover for their illegally imported supplies.
According to Mr. Liem, the control of sugar packaging and circulation as well as other sugar business activities remains lax. He suggested stricter regulations on licensing and all other facets of the sugar business, saying that a sugar production factory must have its own growing area, and must not produce goods by mixing different kinds of sugar together.
The Ministry of Finance needs to issue standardised invoice samples to prevent fraudulent papers being presented to authorities. The Ministry should publish a circular on packaging regulations for sugar products.
He forecast that the output of the 2013-2014 crop would be 1.5 million tones.