Record high sugar prices, Vietnamese businesses suffer 'double blow' amid year-end peak

Representatives of many coal businesses said that since the beginning of the year, input prices of many goods have increased, and recently the price of sugar has reached its highest level in 10 years, which has been a blow to them, making things even more difficult, especially during the time of boosting production and business to serve confectionery during the Mid-Autumn Festival and the end of the year.

Responding to VTC News , a representative of Bibica Confectionery Company said that confectionery production depends heavily on imported raw materials such as wheat flour (almost entirely imported) and sugar (partially imported). Therefore, fluctuations in the prices of raw materials such as sugar and wheat flour on the world market and fluctuations in the VND/USD exchange rate have greatly affected product prices.

This person is also worried that the seasonal factor is very important to the confectionery industry, the revenue of businesses in the industry is mainly concentrated in certain periods such as Lunar New Year or Mid-Autumn Festival. Meanwhile, the world situation is still very complicated, causing external factors such as price fluctuations, exchange rates, supply, transportation costs... to fluctuate unpredictably.

"Therefore, not only the sudden high price of sugar but also the increase in prices of other input materials since the beginning of the year has also caused difficulties for the production and business activities of most confectionery manufacturing enterprises," he said.

The high price of sugar and many other raw materials has caused many difficulties for confectionery businesses. (Illustration photo: Investment Newspaper)

A representative of a beverage company also said that currently, the company uses very little cane sugar and has switched to using liquid corn syrup. However, in the cost structure of beverage products, sugar still accounts for a large proportion, the rest is labor, equipment depreciation and other flavorings.

Chairman of the Beer, Alcohol and Beverage Association Nguyen Van Viet confirmed that sugar accounts for about 15 - 18% of the cost of soft drinks.

“Therefore, although the current record high sugar price may not immediately affect product prices because it is related to previous raw material stockpiling and the speed of product consumption by businesses, it will certainly affect product prices from now until the end of the year and there will be price adjustments in the market,” said Mr. Viet.

According to Mr. Viet, this year the production and business situation of beer, wine and beverage enterprises is facing many difficulties, especially at the end of summer, entering the peak production period at the end of the year, while sugar prices have increased dramatically.

In addition, businesses also have to face the ongoing global economic recession, affecting the domestic economy, causing a significant decrease in product consumption demand.

In addition, the recycling cost for recycling packaging, plastic bottles, aluminum cans and carton boxes... is very high. The imposition of special consumption tax on sugary soft drinks has also affected the soft drink industry and related supporting industries such as sugar cane, retail, packaging...

Meanwhile, responding to VTC News, Mr. Nguyen Van Loc, Chairman of the Vietnam Sugarcane and Sugar Association, said that from the beginning of August 2023, the Indian Government announced that it would ban sugar exports in the 2023-2024 crop year, starting from October 2023. This is also the first temporary suspension of sugar exports in the past 7 years in India.

“The ban on sugar exports by the sugar powerhouse India will significantly reduce the world supply. In Vietnam, the peak season at the end of the year is when many Vietnamese businesses need sugar for production, so they may have to suffer a new supply shock, which could cause prices of many products to increase,” said Mr. Loc.

World sugar prices have skyrocketed as India plans to ban sugar exports in the 2023-2024 crop year, starting in October 2023. (Illustration photo: AFP/VNA)

Recently, world sugar prices reached a 10-year high following news that India plans to limit sugar exports in the 2023-2024 crop year. At its peak, world raw sugar prices were at 27.3 US cents/pound.

The Indian Sugar Mills Association (ISMA) has estimated sugar production for the 2022-23 marketing year at 34 million tonnes, 2.5 million tonnes lower than the latest forecast and down 5% from the same period last year. The quality of cane is lower than expected due to unfavourable weather conditions, early maturity and loss of weight.

For China, the US Department of Agriculture (USDA) forecasts sugar output at only 9 million tons, 1 million tons lower than the previous forecast and 6.3% lower than the previous year.

Overall, world sugar inventories are expected to decrease by 13% in the 2022-2023 fiscal year compared to the previous fiscal year, putting pressure on sugar prices to remain high.

The above context has caused sugar prices in Vietnam to start increasing following the world. In August 2023, domestic sugar prices rose to their highest level in recent years, reaching 20,000 - 21,500 VND/kg, up 12% compared to the beginning of the year and up 14% compared to the same period last year. Even on August 28, a company announced the price of white sugar at 26,000 VND/kg and refined sugar at 27,000 VND/kg.

In this context, the Vietnam Sugarcane and Sugar Association recently recommended that production members participate in price stabilization by bringing sugar to the market according to usage requirements and keeping the current sugar selling price at a reasonable level to ensure the goal of harmonizing interests among related parties.

" Do not let sugar prices increase further to protect your own interests and those of consumers. Absolutely do not carry out or assist in acts of hoarding or price gouging.

In cases of non-compliance with the above recommendations, the Vietnam Sugarcane and Sugar Association will be forced to take countermeasures, including promptly reporting to the Ministry of Agriculture and Rural Development and state management agencies to propose additional tariff quotas for 2023 ," the document of the Vietnam Sugarcane and Sugar Association stated.

PHAM DUY

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