Sugar cane industry should change urgently

The rate of mechanization in the cultivation and harvesting of sugarcane is very low. Photo: ST.

This is a comment made by sugar experts at the Conference on the Restructuring of Sugarcane Industry held by the Vietnam Sugar Association and Thanh Cong Group (TTC) at the last weekend in Binh Thuan province.

The gap in policy

TS. Pham Quoc Doanh, chairman of the Vietnam Sugar Association, said that in 1994, Vietnam had only 9 sugar cane factories with a capacity of under 11,000 tons of sugarcane per day, now it has 41 plants with total capacity of Approximately 140,000 tons of sugarcane per day. However, Vietnam's sugarcane industry is still small and weak in comparison with the world due to fragmented policies, lack of systems, and lack of motivation for sustainable development.

Specifically, the creation of large fields has not been clear legislation, it is only encouraged by the Decision No. 62/2013/QD-TTg dated 25/10/2013 on policies to encourage the development of cooperation and linkage production associated with the consumption of agricultural products, construction of large fields. Meanwhile, most of the material area comes from sugar cane farmers (about 30 thousand households), thus, the scale of production is still small, with the average of each household from 0.7-1.5 hectares of land hill and 0.3-0.5 ha of flat land. This leads to limitations, difficulties for the application of synchronous mechanization, technological solutions into production, affecting on the improvement of sugarcane yield and quality, on reducing raw materials production cost, improving the competitiveness of the sugarcane industry.

About policies to support mechanization and reduce production losses, Mr. Doanh said that so far, the Prime Minister has issued the decisions: Decision No. 63/2010/ QD-TTg dated October 15, 2010, on policy which supports to reduce post-harvest losses for agricultural and fishery products; Decision No. 65/2011/ QD-TTg dated 2/12/2011 and Decision No. 68/2013/ QD-TTg dated 14/11/2013 on support policy to reduce losses in agriculture. But until the Decision No. 68/2013/ QD-TTg, sugar cane is put into the list to be supported. Thus, so far, according to survey results of the Institute of Planning and Agricultural Design (Ministry of Agriculture and Rural Development) shows that mechanization of land only reaches 59% of the area, the care reaches 18%, while irrigation was only 11%.

Funding for scientific research and transfer of technical advances in sugarcane in Vietnam is now at a very low level, only about 3-6% of the average in sugarcane producing countries in the world. Eventually, the funding support for the construction of the 3-tier breeding system in the period 2003-2008 does not support joint-stock companies and since then, there is no support policy.

Mr. Pham Hong Duong, Chairman of TTC Group, also pointed out that Philippines and Thailand have had sugar cane law for several decades, while Vietnam has not yet. This shows that Vietnam needs to change, especially the legal framework and policies for the sugarcane industry to create momentum for the industry to develop sustainably.

Promote products for sugar production

At the conference, the development of products of sugar production also attracted the attention of experts attending the conference. According to Assoc. Prof. Klanarong Sriroth, Mitr Phol Sugar Group, this is an efficient solution to enhance the value chain of the sugar industry. Specifically, one ton of sugarcane with 0.3 ton of bagasse can produce 100-120 KWh, after subtracting the demand for local consumption, it can generate electricity grid of about 60-70 KWh. Agreed with him, Dr. Pham Quoc Doanh also said that according to the master plan of the Vietnam sugar industry, by 2020 there will be about 20 million tons of sugarcane, producing 2.4 million MWh, equivalent to the total capacity of 840 MW; By 2030, there would be 24 million tons of sugarcane, which would produce 2.8 million MWh, equivalent to a total capacity of 970 MW. This is the direction to "benefit both the country and people", bringing benefits to both the State and enterprises.

In addition to electricity generation, experts also point out the tremendous benefits of ethanol production from molasses derived from sugar crystallization, through fermentation. Although molasses products have a low gross margin of less than 1%, ethanol business can bring profit margin of over 30% ... The development of products of sugar production has also brought great success for the sugar industry of several countries in the world such as Australia, Brazil…In the Asian region, Philippines also has a strategy to diversify its products because along with sugar, it will produce more biofuel in the streets.

In the context of domestic sugar being under great pressure from import sugar, the diversification of products and investment in the products of sugar production is an effective way to increase profits, thereby reducing the sugar prices.

In recent years, while waiting for supportive policies from the government, many sugar factories have embarked on building a restructuring strategy. Specifically, in order to solve small scale production that can not be mechanized or irritated, sugar companies actively cooperate with farmers to build large sugar cane fields, invest in machinery, motorization to reduce product costs. In particular, TTC Group is one of the pioneers in this direction. As a result, the sugar price of this unit has decreased significantly, contributing to increasing the competitiveness with import sugar.