Signs of recovery in the sugar industry

The 2022-2023 sugarcane crop has ended with the planting area, crushed sugarcane output and sugar output all increasing compared to the previous two crops. This shows that the Vietnamese sugarcane industry is showing signs of recovery after a long period of gloom. The Vietnamese sugarcane industry has been going through a difficult period for many years. From February 2011 to August 2019, sugar prices fell by more than 60%. The area of ​​raw material areas has continuously shrunk, domestic sugar production has decreased under the general impact of world sugar prices and directly affected by cheap sugar smuggled across the border.

People in Son La province harvest sugarcane. (Photo: QUOC TUAN)

According to reports from operating sugar factories, the total sugarcane growing area in the 2022-2023 crop year is 141,906 hectares, an increase of 17,151 hectares compared to the previous crop, with an average yield of 69.3 tons/ha. In June 2023, our country's sugar industry completed the 2022-2023 sugarcane pressing crop. The cumulative output from the beginning of the pressing season was 9,714,224 tons, producing 941,373 tons of sugar of all kinds. Compared to the same period with the 2021-2022 sugarcane pressing crop, the sugarcane pressing output reached 129% and the sugar output reached 126%. And compared to the same period with the 2020-2021 sugarcane pressing crop, the sugarcane pressing output reached 144% and the sugar output reached 136%. The growth in two consecutive crops shows that the Vietnamese sugarcane industry is recovering significantly. Not only that, in the 2022-2023 crushing season, the sugar industry has successfully achieved the dual goal of raising sugarcane purchase prices to a level comparable to those of other countries in the region, while keeping sugar prices at the lowest level.

However, in the 2022-2023 crop year, the sugar industry will continue to deal with the problem of smuggled sugar. Based on data from the General Department of Customs and the Sugarcane and Sugar Board of Thailand, the Vietnam Sugarcane and Sugar Association estimates that the amount of smuggled sugar in 2021 will be more than 501 thousand tons and in 2022 it will be 816,544 tons. Authorities have taken many measures to prevent and detect trade fraud in most provinces and cities across the country, however, the total amount of sugar detected accounts for less than 5% of the estimated amount of smuggled sugar.

In particular, most of the cases discovered so far have only been handled administratively, so they are not enough of a deterrent, causing the smuggling of sugar that has been a hot topic since late December 2021. Therefore, the fight against smuggling of sugar is ineffective, has many loopholes, and is being exploited by illegal traders. According to the Vietnam Sugarcane and Sugar Association, in May 2023 alone, local authorities discovered many cases of smuggling of sugar.

According to reports from sugar factories that are expected to remain in operation, the production plan for the 2023-2024 crop year will have growth compared to the previous crop year. Of which, the harvested sugarcane area is 159,159 hectares, an increase of 112%, processed sugarcane output is 10,560,399 tons, an increase of 109%, and sugar output reaches more than one million tons, an increase of 110%.

According to Nguyen Van Loc, Chairman of the Vietnam Sugarcane and Sugar Association, in the 2023-2024 sugarcane crop, it is expected that there will be 25 sugar factories operating with a total designed capacity of 122,200 tons of sugarcane per day. This sugarcane crop is expected to face many challenges when facing the El Nino phenomenon, increasing prices of agricultural materials, the situation of smuggled sugar and trade fraud as well as a narrowing sugar market due to increased imports of liquid sugar. For sustainable development, the sugarcane industry needs to take appropriate measures to consolidate and develop the chain of linkages in sugarcane production, especially in the context of increasing competition between sugarcane and other crops in localities.

On that basis, localities need to increase the income of sugarcane growers by allowing people to enjoy good purchasing prices; promote the application of technological and technical solutions to reduce costs and increase sugarcane productivity. On the other hand, localities recommend people to save water resources; implement a variety program aimed at optimizing the structure of sugarcane varieties, creating a breakthrough in increasing sugarcane productivity and quality, contributing to increasing competitiveness and ensuring sustainable development of the sugarcane industry. Moreover, depending on the circumstances of each factory and locality, it is necessary to utilize legal sources to form an insurance fund to prevent risks due to climate change for sugarcane growers, helping them feel secure in cultivating and developing sugarcane. In addition, competent agencies need to monitor, control and deal with the phenomenon of sugar dumping, which narrows the output of sugarcane and breaks the sugarcane chain, or the behavior of holding back goods to increase prices, causing sugar prices to be pushed up abnormally.

In the context that Vietnam has applied trade defense measures to the sugar industry, domestic sugar prices are higher than before, and sugar trade fraud is at greater risk of occurring with more sophisticated tricks. From that reality, the authorities need to establish a monitoring system to collect information on market developments and trade fraud activities to take timely measures. At the same time, sugar factories need to deploy a traceability system to help prevent trade fraud as well as support the authorities to identify the origin of goods circulating on the market and distinguish between counterfeit, fake, smuggled goods, trade fraud, etc.

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