Hanoi (VNS/VNA) - Tariffs cut to zero under the ASEAN Tradein Goods Agreement (ATIGA) from January 1 this year and the COVID-19pandemic have made for a tough year for the sugar industry, heard anonline seminar held by Nhan Dan (People)e-newspaper on September 16.

The Vietnam Sugar and Sugarcane Association (VSSA) reported that a third ofsugar factories have closed and many companies are facing bankruptcy as theycannot sell their products, meaning there is no money to cover productioncosts and pay farmers or workers.

Unbalanced competition between domestically produced sugar and imported sugarfrom Thailand under the ATIGA's commitments is seen as the cause of the problemby industry insiders.

“Currently, the Thai sugar industry is being supported by itsgovernment in many different forms to boost exports. Therefore, the domesticsugar price cannot compete with sugar imported from Thailand,” said VSSAsecretary-general Nguyen Van Loc.

The low sugar price has caused sugarcane prices to fall, seriously affectingthe raw material areas as well as farmers' income.

Many businesses have increased the purchase price of sugarcane to 800,000 -850,000 VND per tonne (35 USD) to encourage farmers to keep growing sugarcane.

However, the increase in raw material prices leads to higher productioncosts. It is estimated that the average cost of producing a kilo of white sugarin Vietnam in the 2019-20 crop year will increase by 1,000-2,000 VND perkilogramme compared to that estimated from the beginning of the crop.

Chairman of the Lam Son Sugar Joint Stock Corporation Le Van Tam said that dueto excess global sugar supply, the price of sugar was lower than cost, productscould not be sold, inventory was large and cash flow was notcirculating, while banks had restricted lending limits.

Along with the effect of the ATIGA, smuggled sugar has alsoplagued the domestic sugar industry.

Pham Hong Duong, vice chairman of Thanh Thanh Cong - Bien HoaJSC (TTC Sugar), expressed concern that Vietnam had 41 sugarfactories with an area of about 300,000 hectares of sugarcane beforeATIGA but 11 had to close after the agreement took effect.
Ofthe 30 factories in operation, only 13 were efficient, and 17 were sufferinglosses, he noted.

Data from the General Department of Customs said Vietnamimported about 200,000 - 400,000 tonnes per year, including both raw andrefined sugar, on average in 2017-19.

However, statistics this year showed imports of sugar toVietnam reached 820,000 tonnes since the ATIGA took effect, an increase ofseven times compared to 2019, mainly Thai sugar.

Vietnam is one of the largest sugar producers and consumers in theworld and in ASEAN. The average annual production capacity of Vietnam is from 1to 1.3 million tonnes of sugar.

Compared to other countries in Asia and ASEAN, Vietnam’s annual average sugarproduction volume is sixth after China, Thailand, Australia, Indonesia andthe Philippines.

Thailand and Australia are the two largest sugar exporters inthe region and Thailand exports about 5 million tonnes of sugar onaverage per year. Vietnam, Indonesia and the Philippines are major sugarimporters of Thailand./.