Food
Failure to stop cheap, smuggled sugar from flooding domestic markets has sent local inventories soaring, local reports say.
The trade department of the Mekong Delta province of Hau Giang, which has more than 100 hectares (247 acres) of sugarcane farms, has asked the Ministry of Industry and Trade to strengthen its anti-smuggling forces in border areas.
And as an immediate solution to help the domestic sugar sector, it suggested that the ministry temporarily halts all sugar imports, including temporary imports for re-export, as sugar supply has far surpassed demand.
The ministry should also impose import tax on sweet substances that can replace sugar and control the quota of those products in the market, and reduce the value added tax on made-in-Vietnam sugar from 5 percent to zero, the department said.
In addition, it proposed establishing a sugar and sugarcane development fund. “The ministry should instruct banks to loosen credit regulations and offer loans to individuals and firms in the sugar industry at preferential interest rates,” the department stated in its letter to the ministry.
The total unsold sugar inventory volume in Vietnam is now at a record level of 700,000 tons, including 300,000 tons in Hau Giang alone, according to the department.
And the situation won’t get any better with just two months before Hau Giang sugarcane farmers harvest a new crop, with no guarantee for the output.
Sugar traders said that imported sugar was more attractive to both wholesalers and retailers because it was cheaper.
Hoa, a retailer in Ho Chi Minh City’s Go Vap District, noted sugar prices in the domestic market has never been this cheap.
Sugar imported from Thailand currently wholesales at VND135,000 (around $6) per ten kilo pack. Vietnamese sugar costs VND5,000-10,000 more for the same quantity.
Apart from Thailand, Vietnamese traders also buy sugar from China and South Korea.
In June, smuggled sugar from Thailand bankrupted three of 10 factories in Vietnam’s Mekong Delta, industry insiders noted, adding that not much has been done to improve the situation.
Nguyen Bao Ve, agronomist and professor at the Can Tho University said that high production costs for Vietnamese farmers, low productivity, and uncompetitive manufacturing technology were also part of the problem.
Ve argued that it was essential to restore fair trade and take immediate action to prevent smuggling. “At the same time, the companies need to reform themselves, reduce costs, and cooperate with farmers to reduce sugarcane production costs.”
He also warned that apart from improving productivity and innovating technology to match daily consumption of 6,000 tons of sugarcane, mechanizing production was of great importance. “Cambodia has fully mechanized sugarcane farming, while 60 percent of Vietnamese sugarcane farming is still conducted manually.”
