VIETNAM: Sugar industry struggling to find balance

Published: 05/11/2015, 11:26:14 AM

The domestic sugar industry is struggling to gain a balance between supply and demand, after years of grappling with high inventories and plunging oil prices, according to the Vietnam News Service.

According to the Department of Processing and Trade for Agro-forestry-Fisheries Products and Salt Production under the Ministry of Agriculture and Rural Development, sugar inventories totalled more than 560,000 tonnes, sliding 141,500 tonnes over a year ago.

As of April end, 19 of 41 domestic sugar factories recorded more than 1.24 million tonnes of total production in 2014/15; this was 218,440 tonnes lower than the same period last year.

The Viet Nam Sugar and Sugarcane Association said sugar plantation area decreased by 261.5ha against the previous crop, as plunging sugar prices and unfavourable weather conditions deterred many farmers.

Ha Huu Thai of the association noted that the production and consumption of sugar in the domestic market had been unstable during recent crops, pushing the industry into a difficult situation of supply exceeding demand.

The association hopes that the ASEAN Economic Community will put pressure on the domestic sugar industry to restructure and enhance its competitiveness, when the tax rate will be cut to zero by 2018.

Enhancing production capacity and technology is critical for the sugar industry to lower sugar prices as the current production costs of Vietnamese sugar, averaging about VND12 million (US$550) per tonne, remained higher than that of many countries, including Thailand, Brazil, and India. Higher prices made Vietnamese sugar unable to compete in the world market.

The world's sugar production has been predicted to be around 183.8 million tonnes this crop and consumption demand expected at 182.5 million.