Domestic sugar demand to be met

10:49 | 24/11/2016 Trade

(VEN) - The soar in sugar prices in foreign markets has led to higher sugar prices in Vietnam. Vietnam Economic News’ Hanh Nguyen spoke with Vietnam Sugarcane and Sugar Association Chairman Pham Quoc Doanh.

Domestic sugar demand to be met

What are the reasons for increases in sugar prices in foreign and domestic markets?

The sugar price in the London Sugar No. 5 market (referring to delivery in December) was approximately US$600/tonne, up from US$540-550/tonne just one week earlier (referring to delivery after December). The increased foreign market price caused the domestic price to soar by VND500-700/kg compared to early                September 2016.

Demand exceeding supply was the main reason. Although Brazil had a bumper crop, it couldn’t make up for sugar shortages in other countries and territories, as consequence of crop failure caused by drought and saltwater intrusion. The International Sugar Organization (ISO) estimated that an additional seven million tonnes of sugar was needed to satisfy the world’s demand.

What did the Vietnam Sugarcane and Sugar Association do to keep the domestic sugarcane and sugar market stable?

As soon as the sugar price in foreign markets increased, we sent documented requests to our members, asking them to tell sugar mills and companies not to raise sugarcane prices without agreement between members of the association’s regional pisions. That is aimed to avoid conflicts among sugarcane sellers and purchasers as well as broken price agreements in the region. If sugar mills and companies want to give incentives to sugarcane farmers, they should provide them with non-price assistance such as support in the form of transport, fertilizer and cultivation instruments and equipment.

We told sugar mills and companies to prepare flexible sales plans with proper prices and sales volume, not to cause fake scarcity in goods and sudden price changes, in order to keep the market and prices stable.

How will farmer’s benefit be assured in cases where sugar prices in foreign markets continue to rise while sales contracts are already signed with lower prices?

The current sugarcane crop has just begun. In October or November, the association will work with sugar mills and discuss price changes to ensure farmer’s benefit. Farmers play a crucial role in the supply chain. Sugar makers have acknowledged that farmers’ unsatisfactoriness could lead to the decline in sugarcane production and profit of sugar producers. The biggest matter of concern is how to ensure benefit of both parties and tighten the link between sugarcane farmers and sugar companies.

What are sugar output forecasts for the 2016-2017 crop? Will Vietnam face sugar shortages in the coming time?

In the 2016-2017 crop, there are 40 sugar mills and around 240,000ha of sugarcane with signed sales contracts nationwide and an average yield of more than 65 tonnes/ha. It is estimated that over 15 million tonnes of sugarcane would be turned into more than 1.4 million tonnes of sugar, half of which would be refined sugar.  

With that production output in addition to sugar imported under tariff quotas, sugar to be imported by Hoang Anh Gia Lai from Laos, last year’s inventories and next year’s production, the domestic demand will be satisfied.