Rising demand forces sugar prices up

Monday, Mar 16, 2015 08:00

The association said at the current rate Viet Nam was expected to produce over 1.5 million tonnes of sugar this year, compared with 1.6 million tonnes last year. — Photo BizLIVE
by Le Hung Vong

Authorities' efforts to crack down on contraband and a simultaneous rise in demand have sent sugar prices soaring by 10 per cent in the three weeks since Tet.

According to the Viet Nam Sugar and Sugarcane Association, wholesales prices of sugar had stood at VND11,200 – VND11,800 per kilo before the New Year and have risen now to VND12,200–12,400 in Ha Noi, VND12,500–13,000 in HCM City and VND12,100 –12,400 in central provinces.

Exports to China cost VND13,000–13,200 per kilo in early March.

But despite the rising prices, sales are on the rise. In February over 324,000 tonnes were sold by plants across the country, more than double the 161,000 tonnes sold in the same period last year.

It is also the biggest ever volume of sugar sold in a single month.

Dr Ha Huu Thai, chief of the Ha Noi branch of the association, said the recent arrest of Vi Nguon Thanh (alias Ti Sugar) helped stopped sugar smuggling into Viet Nam, another cause for the increase in prices.

As a result, sugar inventories remained low.

Figures from the Ministry of Agriculture and Rural Development show that sugar mills had 272,000 tonnes at the end of January and 300,391 tonnes a month later.

The association said at the current rate Viet Nam was expected to produce over 1.5 million tonnes of sugar this year, compared with 1.6 million tonnes last year.

Nguyen Hai, general secretary of the association, said higher prices and good sales allowed refineries to increase the price they pay farmers for sugarcane from VND20,000 per tonne to VND30,000 as sought by the Ministry of Agriculture and Rural Development.

These "optimistic" signs notwithstanding, experts say, it is now time for the country's sugar and sugarcane industry to achieve a "revolution" with relation to its production scale, mode, and technologies.

In an article published recently in the local media, Deputy Minister for Industry and Trade Nguyen Cam Tu highlighted the weaknesses of the sugar industry like high production costs, its lack of support for cane farmers, production and trading hurdles and lack of co-ordination between sugar producers.

Though it was better protected (by the State) than most other sectors, the sugar-sugarcane industry had not achieved as good a performance as expected, he said.

"Sugar refineries, which have relied on protectionism, have not shared their profits with farmers. Thus, sugarcane growers still sustain losses."

The industry is set to face more and bigger challenges when the country becomes more integrated with regional and global markets.

Thai co-operation

Minister of Agriculture and Rural Development Cao Duc Phat met with his Thai counterpart Petipong Pungbun Naaydhya on Thursday to discuss co-operation between the two ASEAN member countries for developing a sustainable rice market and boosting the value of farm exports.

Naaydhya said competition forced down the prices of a number of major agricultural commodities like rice, rubber, vegetables and fruits, sugar, and seafood, causing losses to farmers in Thailand and Viet Nam, the top exporters of farm produce in the Southeast Asia.

He pointed out the example of a company in Da Nang that exported rubber for $1,450 per tonne (FOB price) in January though agreements between exporters in Southeast Asia prohibit anyone from selling for less than $1,500.

Thai firms have signed rice export contracts at $390 per tonne in the first two months of this year, much lower than the $420-430 for Indian rice and $400 for Vietnamese rice, according to the minister.

The low prices have caused Thailand to incur losses of 30 billion baht (about $910 million) in the past few years.

Viet Nam and Thailand, who grow similar rice varieties, account for over 50 per cent of the world's exports of the grain.

To stop the unhealthy competition between rice exporters in the two countries, the Thai minister urged the Thai and Vietnamese governments to create strategies for co-operation to develop sustainable export markets that can bring long-term benefits for both countries.

Vietnamese and Thai authorities should join hands to set common benchmarks for rice price, quality, and production as well as export prices, he said.

Phat promised strengthened co-operation with Thailand to secure the long-term benefits of both countries.

Viet Nam has nearly 4 million hectares of land under rice and over 1 million hectares under rubber.

Recruitment drive

Industrial parks and export processing zones in the southern provinces of Binh Duong and Dong Nai are in the process of recruiting nearly 100,000.

Though most workers returned for work after Tet – according to the province Department of Labour, Invalids and Social Affairs, over 493,000 workers at State-owned and foreign firms, or 90 per cent of the total number working for them – 505 State- and foreign-owned garment and footwear companies in Dong Nai are hiring some 48,000 workers.

Those recruiting include Dona Standard VN, Dong Nai Footwear Ltd., Hwa Seung Vina Ltd., Tainan VN, and Tae Kwang Vina, with each requiring 2,000 to 4,000 workers.

One of the reasons for the demand is that many workers are looking for better opportunities.

Nguyen Van Minh of Binh Duong Province, said, for instance, that he had worked for a footwear company in Song Than IP (Binh Duong Province) before moving to Bien Hoa, where he lives with his wife and children.

"I've got a reasonable job with monthly salary of VND5 million to VND6 million. Living with family will help me reduce spending," he told Tuoi Tre (Youth) newspaper.

In Binh Duong, companies based in IPs and EPZs are looking to hire 50,000 workers.

Nguyen Phung Trung, deputy director of the province Department of Labour, Invalids and Social Affairs, said many foreign firms were looking to hire for new or expanded plants.

They were in the footwear, furniture, packaging, tea and coffee processing, and machinery industries, he said.

But more than 86 per cent of their need was for unskilled workers.

Several supermarkets that have opened recently in Binh Duong, such as Aeon (Japan) and Lotte Mart (South Korea), have also hired, giving a boost to demand for human resources in the services sector.

Kim Huyn Ho, general director of Korean-owned Kumho Tire Vietnam Co., based in My Phuoc IP No 3 in Binh Duong's Ben Cat town, was quoted by Tuoi Tre as saying that his firm plans to hire 2,200 workers to increase production by one million tires this year.

A wood processing company in Ben Cat said it would need 1,500 more workers for its expansion plans now underway. — VNS

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