Vietnamese sugarcane needs specific policy to rebound

Harvesting sugarcane. Photo: TTXVN

Imported sugar is overwhelming

According to the report "Vietnam Sugar Industry Supply Chain: Actual Situation and Some Aspects of Sustainable Development" recently published by the Vietnam Sugar Association (VSSA) in collaboration with Forest Trends Organisation, the area of current sugarcane cultivation is about 151,000 ha, corresponding to output of about 7.66 million tons of sugarcane and 0.77 million tons of sugar.

Vietnam ranks fourth in Southeast Asia (after Thailand, Indonesia, Philippines) and 15th in the world regarding the sugarcane growing area. Sugarcane production is the first stage of the supply chain, with the main participation of more than 126,000 farmer households in many regions across the country.

Mr. Nguyen Van Loc, acting Secretary General of VSSA, said that in recent years, Vietnam's sugar industry had tended to decline.

The area of ​​sugarcane cultivation had decreased sharply, the yield of sugarcane had gone down while the number of sugar factories had to close or dissolve, stop or reduce operations, many farmer households converted sugarcane to other crops.

Thus it affected production efficiency and domestic sugar supply. The direct cause of this decline was the official integration of the sugar industry. The door of the domestic market was wide open for imported sugar at a price that was fiercely competitive with the price of domestically produced sugar.

The ASEAN Trade in Goods Agreement (ATIGA) officially took effect for sugar products in Vietnam from January 1, 2020, allowing sugar from ASEAN countries, especially from Thailand to be imported into Vietnam with a tariff rate of 0 – 5%.

Besides that, Vietnam also imported from 67,000 to 190,000 tons of high fructose corn syrup (HFCS), which was also creating great competitive pressure on domestic production.

“Besides this, some countries, especially Thailand, still maintained policies of dumping and subsidizing domestic sugar production, which led to low export prices. The low price in the context of integration resulted in the overflow of import goods into Vietnam, not only through the channel of importation by paying full tax but also through smuggled channels. The domestic sugar industry could not compete with this import supply stream," Mr. Loc said.

Developing specific policies for links

Besides the issue of imported sugar, according to Mr. Cao Anh Duong, acting Chairman of VSSA, there were currently a number of issues that had a direct impact on the sustainability of the industry. That was the lack of policies or policies that were not strong enough and ineffective to encourage the application of mechanization, improve sugarcane varieties and farming processes to improve yield, quality, and reduce sugarcane costs in areas that had advantages, maintain and expand sugarcane growing area, ensure supply for sugar processing; planning/orienting to link the raw cane growing area with the development of a system of sugar processing plants; controlling smuggling and trade fraud across the border of sugar products; development orientation of high-quality raw material cane sources.

“The state's sugarcane industry management policy was still situational with many shortcomings, fragmentation and lack of synchronization, which had not created a balance for neighboring countries. Currently, there was a lack of policy on the benefit-sharing ratio between farmers and factories, as well as a policy to control the price of sugar cane and sugar, and transparency in the analysis to confirm the word sugar and the percentage of impurities," Duong said.

Talking to Customs News, Mr. To Xuan Phuc, an expert from Forest Trends, acknowledged that in order to help the sugar industry improve competitiveness, towards sustainable development in the future, first of all, it was necessary to develop a specific policy on chain links.

Forming a chain-link was not simply a matter of sugar mills and sugarcane growers voluntarily participating, but also required the important role of the State. This policy should clearly stipulate the ratio of benefits between sugarcane growers and supply chain participants, especially factories. “It is necessary to ensure the interests of the people was at 60-70%. This model had been successful in countries such as Thailand, the Philippines and Indonesia,” Phuc added.

The next important content mentioned by Mr. To Xuan Phuc is to improve competitiveness in the production stage; improve competitiveness in processing and consumption. The unfair competition forms are common among processing enterprises in the industry, including the system of traders colluding with enterprises in competing for raw materials. Increasing competition in processing requires a healthier and more transparent system of factories and traders. Local authorities can make regulations in full consultation with stakeholders in the purchasing and processing activities of factories and the system of traders.

Mr. Cao Anh Duong emphasized strengthening the control of imported sugar, especially smuggled sugar. Effective control of smuggled sugar creates opportunities to expand imports through official channels and promote domestic production. Supervision mechanisms at both central and local levels need to be more drastic, including severe penalties for violations, even for officers.

In addition, it was also necessary to immediately set up a QR code system for traceability for sugar products and required all sugar manufacturers, exporters, importers and distributors in Vietnam to participate in the system, integrated with national and international traceability systems.

“This was aimed to strictly control the source of imported sugar, facilitate competent forces against smuggling of sugar and the Market Survellience to control, inspect and sanction fraudulent trade in smuggled sugar,” said Cao Anh Duong.