Sugar makers hope to cut stockpiles

Sugar makers hope to cut stockpiles

Viet Nam will have a sugar surplus of several hundred tonnes this year, and the industry is looking to increase exports and reduce inventory.

The Ministry of Agriculture and Rural Development (MARD) estimates domestic demand for sugar at about 1.4 million tonnes this year.

Sugar output is forecast to reach 1.5 million tonnes in the 2012-13 crop. With 178,000 tonnes in stock since the previous year and 70,000 tonnes imported under Viet Nam’s World Trade Organisation commitments, the country will have a surplus of nearly 350,000 tonnes this year.

However, industry insiders say the real surplus is likely to be much higher because the quantity of sugar illegally imported is very high every year.

To face the challenge of rising inventory, MARD and the Viet Nam Sugarcane and Sugar Association have proposed that the Ministry of Industry and Trade (MoIT) allows exports of 300,000 tonnes of sugar this year.

A representative of MoIT agrees with the proposal, but wants it to be done in phases, with the first phase exporting 100,000 tonnes, said Nguyen Hai, the association’s general secretary.

But another representative from the ministry opposed allowing the export via unofficial cross-border trade with China at this time, saying that the industry must wait until the end of the crop – between July and August, assess the domestic supply and demand situation before considering exports.

The association said enterprises will lose export opportunities if they wait until the end of the crop.

Selling through unofficial cross-border trade will help reduce inventories at sugar mills, it said.

Currently, many sugar mills lacked capital for production because of high inventories and low domestic demand.

Sugar prices dropped by VND200-VND300 a kilo compared to weeks for Tet, pushing down sugarcane prices in the north and central regions.

Despite facing many difficulties, sugar mills in the Cuu Long (Mekong) River Delta have not lowered purchase prices for sugarcane from farmers for concern that if the latter incur losses, they would stop planting sugarcane. In this case, the mills would not have material for production the next year.

Co Tri Dung, general director of the Soc Trang Sugarcane and Sugar Joint Stock Company, said if MoIT does not allow sugar export via unofficial cross-border trade, mills in the Mekong Delta will surely reduce sugarcane prices and farmers will suffer losses.

Sugar mills in the delta will organise a meeting at the end of this month to discuss sugarcane purchase prices.

vietnamnews