In the 2022-2023 crop, the sugarcane price is forecast to increase by 50,000 – 80,000 VND/tonne of sugarcane 10 CCS, equivalent to 1,100,000 – 1,200,000 VND/tonne when Vietnam applies measures to combat trade evasion by imposing trade defense tariffs on five ASEAN countries after Thailand. Reasonable trade defense is the right support measure of the Government for businesses and sugarcane growers when the profits of sugar factories increase sharply. For example, Son La Sugar Joint Stock Company recorded an after-tax profit of 81 billion VND in the first quarter, 2.4 times higher than the same period last year and exceeded 8% of the whole 2022-2023 crop plan.
The purchasing price of sugarcane also increased to a record high level of more than 1.16-1.2 million VND/tonne of fresh sugarcane, making farmers excited and confident to develop the raw material area for the factory to avoid the situation of “bumper season but lost prices”.
Sugar prices increased positively with support from the Government through trade defense measures. (Photo: Internet)
LACK OF SUGAR IS STILL A DIFFICULT PROBLEM
In addition to positive factors of price, food and beverage production enterprises are facing the pressure of a lack of sugar, causing the smuggling of sugar in the last months of the year.
By September 30, 2022, the Vietnamese sugar sector has finished the 2021-2022 sugarcane crop. Cumulatively by the end of the crop, the whole sector has pressed 7.5 million tonnes of sugarcanes, producing nearly 747,000 tonnes of sugar. Although the national sugar production has increased, it is only 11.64% higher than the 2020-2021 crop, meeting only 37% of the domestic demand with an estimated consumption of nearly 2 million tonnes per year.
Meanwhile, the third and fourth quarters are the peak period for food and confectionery products for the Mid-Autumn Festival and the preparation of goods for the Lunar New Year. Factories often start pressing sugarcanes in December, which causes a shortage of sugar – inventories decreased but the pressing season has not started yet.
The domestic sugarcane industry has not been able to develop sustainably the raw material area. (Photo: Internet)
In the context of sugar shortage as current, on November 18, the Ministry of Industry and Trade decided to supplement the import tariff quota of the 2021 – 2022 sugar crop by 200 thousand tonnes, of which, raw sugar is 160 thousand tonnes and refined sugar is 40 thousand tonnes to help supplement raw materials, promote the performance of domestic production enterprises. Previously, on September 23, 2022, the Minister of Industry and Trade assigned import tariff quotas for sugar by auction method in 2022 with a total quantity of 113,000 tonnes.
The additional tariff quotas for sugar imports are considered to be the latest move by the State to support the sugarcane industry in short term. The increased import tariff quota at this time has saved the whole industry when the sugar market is stabilized, the production enterprises use sugar as the main material with a stable and qualified supply, and consumers are able to use safe products at reasonable prices.
Thus, after trade defense tariffs, high import quotas continue to be an expected signal for a strong recovery of the domestic sugarcane industry after the pandemic. That means the Government is focusing on developing the sugarcane industry, ensuring domestic production, and benefits for consumers and sugarcane growers.
However, in the long term, to solve the serious shortage of supply and the sudden increase in sugar demand for food production during the Tet holidays, the quota in 2022 only meets a very small quantity of demand. In fact, businesses and associations of domestic producers have called for support from the Government and suggested additional import tariff quotas for sugar to ensure the sugar demand across the country. The food association of Ho Chi Minh City has sent an official letter to the Government and related Ministries proposing at least two additional quota biddings early in 2022.
The efforts of enterprises to accompany farmers and develop sustainable raw material areas still require much support from the Government. The sugar prices and the prospects of the industry in the coming time depend greatly on the urgent addition of import tariff quotas before the New Year holiday to balance the increasing demand from the market./.