Development chances for the sugar industry are still ahead if it can re-organise itself more effectively, Prime Minister Nguyen Xuan Phuc said at a meeting seeking ways to tackle difficulties facing the sector on February 18.

Farmers in Tam Da commune of Son Duong district, the northern
province of Tuyen Quang, harvest sugarcane (Photo: VNA)

At the meeting of the Government’s permanent members in Hanoi, the Ministry of Agriculture and Rural Development reported that the sugar and sugarcane industry are suffering numerous difficulties. 

In the 2018-2019 crop, 17 of the 38 firms faced the risk of losing equity. Prices of sugarcane material declined by 100,000 – 200,000 VND per tonnes to 700,000 – 800,000 VND per tonne, equivalent to production costs. Meanwhile, seven sugar mills have suspended operations, and only four or five factories are working effectively.

On January 1 this year, Vietnam removed the tariff-rate quota on sugar imports under the ASEAN Trade in Goods Agreement (ATIGA). Besides, many countries around the world have provided price subsidies for this commodity, so sugar import prices are very cheap. Meanwhile, Vietnamese businesses almost do not have any markets to export sugar to because of other countries’ protectionist policies, according to the ministry.

Addressing the event, PM Phuc said the sugar industry has yet to be drastic enough in re-organising itself amid the country’s intensive integration into the world.

He noted Vietnam is currently a member of not only ATIGA but also 12 other free trade agreements. Additionally, climate change has resulted in drought in sugarcane farming areas, regulations on sugar imports remain unsuitable, the sector’s restructuring and sci-tech application have yet to come to fruition, not to mention trade fraud.

The sector needs to be well aware of these challenges to align production with the market, he said, believing that development chances for the sugar sector are still ahead if it can carry out effective re-organisation.

Particularly, this year, the world’s sugar industry may contract while sugar demand and prices may increase. This is an opportunities for the Vietnamese sector to restructure production, the PM noted.

He suggested that domestic businesses can also find development chances in by-products to produce electricity, plywood, ethanol and fertiliser to create more added value.

The Government leader stressed the sugar industry of Vietnam must hold the spirit of being ready to compete and compete successfully, asking businesses to restructure themselves and accept to be eliminated if they perform poorly.

The State will have support measures, but it doesn’t subsidise the sugar industry. The sector must compete fairly in the context of international integration, PM Phuc said.

At the meeting, he agreed on the Vietnam Sugarcane and Sugar Association’s proposal on assigning authorised agencies to carry out trade remedies that don’t run counter to international rules so as to fight the dumping of sugar products while enhancing the combat against sugar smuggling and trade fraud.