Vietnam Sugarcane and Sugar Association seeks for government support
Sugarcane prices account for 80% of sugar prices. About 90% of the material zones belong to farmers with out-dated technology in cultivation which do not help to lower the final prices. Doanh said if the authorities didn't provide help, local firms will lose their foothold in the market.
Many sugar companies in Vietnam have been unable to sell sugar although prices fell to a record low of VND12,000 (USD54.5 cent) per kilo last year. VSSA has proposed to the prime minister to delay the implementation of the trade agreement with ASEAN to 2020 at the earliest.
The association has also recommended the Ministry of Finance to continue slapping a 5% tax on sugar imports from ASEAN countries after 2018 to help make domestically-refined sugar products competitive.
According to many experts, when the market is open and firms are going global, the sugar sector is going backwards by seeking for subsidies and protection. The sector is in difficulty because both local firms and Vietnam Sugarcane and Sugar Association refuse to make changes or actively find solutions for their problems.
Le Dang Doanh, former head of Central Institute for Economic Management (CIEM), agreed that when the ASEAN Trade in Goods Agreement was applied, 22 factories with capacity less than 3,000 tonnes per day would be shut down which would affect 110,000 farmers and 480,000 workers. Farmers may not be able to find another tree to replace the sugarcane.
However, he still objected to VSSA's proposal, saying that it's unacceptable if protecting the sugar sector means violating trade agreements. Such a move would be bad for international relationships and other countries may retaliate. Moreover, it's unfair for 93 million Vietnamese who will have to buy sugar at high prices if the government agrees to protect the sugar sector.
The sugar sector needs immediate reform to improve capacity and reduce prices. "Not all sugar firms are in grave difficulties. Thanh Cong successfully invested in Laos and doubled its capacity," Doanh said.
Many experts agreed that the sugar sector must upgrade their technology. Philippines has 450,000 hectares of sugarcane and produces 2.5 million tonnes of sugar each crop. Vietnam has 300,000 hectares but can only produce 1.5 million tonnes.
Minister of Agriculture and Rural Development Tran Thanh Nam said the sugar sector needed to reform but first they should halt sugar imports to deal with high inventory levels. As of January, the sugar stock reached 280,000 tonnes.
The VSSA said they would work with Ministry of Agriculture and Rural Development to find new varieties of sugarcane. The ministry also issued a development orientation plan to 2030 which will maintain the current material zones. 91% of the bagasse will be recycled to generate 1.6 trillion kWh. More investments will be poured into ethanol and microbiological fertiliser production in the existing sugar mills.
