According to the Vietnam Sugarcane and Sugar Association (VSSA)’s September production report, the domestic market is facing a surplus of sugar while illicit supplies continue to enter from border areas adjoining Laos and Cambodia, competing directly with sugar made from sugarcane.
Prices for smuggled sugar have continued to fall, making it harder for domestic producers to sell their products.
At the end of September, domestically produced white granulated sugar sold for VND 18,000-19,400 per kg, while smuggled sugar was priced at around VND 18,000 per kg.
Meanwhile, global sugar prices have risen amid concerns over worldwide supply. The contrast suggests that Vietnam’s domestic market is facing pressures beyond ordinary supply and demand, including illegal trade.
Harvesting sugarcane for sugar production materials (Photo: DT).
On September 20, authorities patrolling the Vietnam-Laos border along the Sepon River in Quang Tri Province discovered a motorboat moored close to the Vietnamese bank. The boat was carrying 3.2 tonnes of white granulated sugar made in Thailand and being transported into Vietnam.
Officers also found several people unloading sacks of sugar from the boat and carrying them towards two lorries parked on an open plot about 50 metres from the riverbank. Inspections revealed a further 3.65 tonnes and 3.15 tonnes of Thai-origin white granulated sugar in the two vehicles.
Investigators found that the sugar had been purchased and smuggled from Laos through an arrangement with a Laotian individual, with the aim of selling it for profit in Vietnam.
In Dong Thap Province, the illegal transport of sugar by water from Cambodia has also remained a persistent problem. In late September, authorities caught an individual using a small motorised boat to smuggle 1.8 tonnes of granulated sugar from Cambodia into Vietnam.
The VSSA said Thai-origin smuggled sugar continued to circulate and be sold widely at wholesale markets.
The domestic sugar industry is also facing competition from high-fructose corn syrup (HFCS), a liquid sweetener increasingly used by manufacturers, particularly in the beverage industry.
Data from Vietnam Customs cited in the report showed that the country imported nearly 23,500 tonnes of HFCS in September. Imports totalled almost 176,500 tonnes in the first nine months of the year, equivalent to 107 per cent of the volume recorded in the same period last year.
Importers are mainly beverage manufacturers, which were previously major buyers of refined sugar.
Lorries carrying raw sugarcane into a sugar production plant (Photo: TL).
The VSSA expects the domestic market to remain oversupplied. It said Vietnam’s sugar prices were already the lowest among the regional sugarcane-producing markets compared in the report: Indonesia, the Philippines and China.
“Sugar produced from sugarcane has to compete with cheap smuggled sugar and sugar of unclear origin, while in the industrial segment, most demand continues to be replaced by HFCS,” said Nguyen Van Loc, chairman of the VSSA.
“If pressure from smuggled sugar and sugar of unclear origin is not brought under effective control, domestic prices could come under further downward pressure, running counter to the upward trend in global prices,” he said.