VN sugar firms bitter as smuggling soars unchecked

26.05.2017

The huge volume of cheap sugar smuggled in from Thailand is among the key reasons for high inventories at sugar factories, according to the Viet Nam Sugar and Sugarcane Association.

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Farmers harvest sugarcane in the southern province of Hau Giang.

Speaking at a meeting in HCM City on Wednesday, Pham Quoc Doanh, chairman of the VSSA, said as of May 19, sugar mills had crushed 12.2 million tonnes of sugarcane to produce 1.13 million tonnes of sugar, about the same as during the last crop.

But demand for their products has been very low compared to last year, and inventories have risen to more than 748,000 tonnes, a record high for the industry, he said.

He listed several reasons for this.

This year’s crushing season started 15-30 days later than usual due to the changing climate, causing inventories to pile up, he said.

Smuggled sugar entering the local market affected demand for local products, he added.

“Smuggling of sugar into Viet Nam is becoming more sophisticated. It used to come mainly through border gates in the south-west, but now this has spread to the central and Central Highlands provinces and even the north.”

Smuggling is done not only on motorbikes but also boats, he said.

The prices of the smuggled products are VND1,000-2,000 per kilogramme lower, he said.

Despite authorities’ efforts to combat the smuggling, the situation has not been improved, and in fact is worsening, he said.

Le Trung Thanh, vice chairman of the Lam Son Sugar and Sugarcane Company, said the volume of smuggled sugar this year is more than 500,000 tonnes.

It comes mainly from Thailand, which subsidises sugar production and export, he said.

Besides, sugar is imported for re-export but a portion is sold in the domestic market at lower prices, he said.

The average consumption in Viet Nam is estimated at 1.5 million tonnes a year, but has been lower this year.

Many beverage and confectionary firms have reduced production due to an increase in imported beverages and confectioneries, Dang Phu Quy, a board member of Quang Ngai Sugar and Sugarcane JSC, said.

Traditional villages in Ha Noi did not buy its sugar this year and major factories bought less than 50 per cent of what they had registered to buy, he said.

Delegates at the meeting said an increase in the use of sweeteners by many processing firms also affects consumption of sugar.

Urgent solutions

The association as well as businesses have suggested many measures to resolve the problem, including stepping up the fight against smuggling, establishing technical barriers and inspecting the quality of sugar in the market, tightening checks of imports for re-export and others.

Local authorities should step up inspection of business establishments that are licensed to produce sugar but do not have factories and instead sell smuggled sugar.

The association urged the Ministry of Industry and Trade to auction quotas for sugar imports under Viet Nam’s WTO commitments in the third quarter.

Bui Thi Quy, general director of Van Phat Wine JSC, said sugar mills need to improve quality of domestic sugar and reduce their prices.

Tran Van Hung, deputy general director of Can Tho Sugar and Sugarcane Company, said authorities should penalise smugglers more severely and organise the auction to smuggled goods.

Deputy Minister of Agriculture and Rural Development Tran Thanh Nam said his ministry would work with other ministries, agencies and localities to check smuggling.

He suggested that sugar mills should invest more in technology to cut production costs and extract all the sugar from sugarcane.

If home-made sugar is cheap, there would be no chance for smuggled sugar to flood the country, he pointed out.

His ministry would consider the petitions received at the meeting from the association and businesses to find solutions to their difficulties, he promised.



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