Unfair competition "strangles" the sugarcane enterprises?

Taking the purchase of raw materials is one of the reasons that affect the quality of the whole sugarcane industry. Picture: Nguyen Thanh.

"Living death"

The NASU Sugarcane Company Limited (Nghe An) had the raw sugarcane material areas planned by the Nghe An People's Committee in the districts of Nghia Dan, Quy Hop, Quy Chau. Over the past years, the enterprise invested the farmer households with loans for sugarcane cultivation.

According to the representative of business leaders, in 2017, the Company provided loans to the farmer households with a total amount of 110 billion VND, of which non-refundable aid was to grow sugarcanes with over 6 billion VND. Not only investing the farmers in loans, the Company also signed contracts to cover all sugarcane products.

However, now the Company is falling into the a scene of "living death", with annual losses of over 100,000 tons of sugarcane, accounting for nearly 20% of total output into the hands of other enterprises. Specifically, the Song Con Sugarcane Joint Stock Company bought the canes of the NASU Sugarcane Company Limited in the area that the People's Committee of Nghe An province planned for the NASU Sugarcane Company Limited for an output of over 100,000 tons of canes. The trading system of Song Con Sugarcane Joint Stock Company paid higher sugarcane prices than the NASU Sugarcane Company Limited, about 20,000 VND/ton to "hand over".

"This move disrupted strongly the harvesting and transportation plan of sugarcanes among the locations in the raw material areas of the enterprises, and at the same time, caused the difficulties in arranging the harvesting staff and sugarcane transportation. In addition, the Company also lost the invested capital for the farmers”, said the representative of the NASU Sugar company.

Apart from the NASU Sugar Company, the Song Lam Sugar Joint Stock Company (Nghe An) was in the same situation. In general, the company buying sugarcane was still the Song Con Sugar Joint Stock Company.

"Although beginning the new sugarcane harvesting process, now the raw material that has been planned for the plant of Song Lam Sugar JSC fought others by buying from the traders of the Song Con Sugar Company. This has a great impact on the sugarcane crushing process of the plant”, said the representatives of Song Lam Sugar JSC.

Losses for the sugar industry

In fact, the situation of fighting each other in buying the raw materials among the sugarcane companies is not a new issue. Viewing the issue, Mr. Pham Quoc Doanh, Chairman of the Vietnam Sugar Association said that the consequences had been affecting not only the interests of the enterprises, but also the quality of the entire sugarcane industry.

Mr. Doanh explained that the sugarcanes were purchased in two forms. The first was the purchase of tons and the second was the purchase of sugar reserves per volume unit. The situation of fighting each other in buying the raw sugarcane materials made some enterprises buy sacks of the sugarcanes from the farmers to crush without buying in the form of sugar volume. Since then, the farmers were not interested in the quality and volume of the sugarcanes that were greatly affecting the quality of the sugar industry.

In addition, only seeing the immediate benefits, selling sugarcanes to the enterprises which paid the higher prices caused the losses for the farmers. "Sugarcane in Nghe An often has large sugar reserves for when the purchasing prices could increase a few hundred thousand dong per a ton of raw material. If the enterprises had bought sacks of sugarcanes, they would have only paid a general price. To a certain extent it caused the enterprises’ losses”, Mr. Doanh said.

In the above case of the NASU Sugarcane Company Limited and the Song Lam Sugar Joint Stock Company, these enterprises reported to the local authorities, but the issue has not been resolved completely.

According to some agricultural experts, while the sugar industry had been facing many difficulties, the relevant ministries and agencies should have made stronger solutions to completely resolve the situation of fighting each other in purchasing raw materials. Also, they should have contributed by helping the enterprises increase competitiveness, ensuring a sustainable development.