The implementation of tariff reduction to zero per cent under the ASEAN Trade in Goods Agreement (ATIGA) from January 1, is an obsession with the Vietnamese sugar industry.
This is because the sugar industry is facing a flood of imported goods entering the domestic market.
Industry insiders stated that the sugar industry is predicted to perform poorly in the 2018-19 period, as locally-refined sugar will have to compete with sugar from Thailand while the local industry has not yet improved its competitiveness.
Several sugar processing factories were closed while farmers turned their backs on growing sugarcane. To rescue the industry, the sugarcane sector needs to solve existing problems as soon as possible.
Difficulties
The difficulties facing the sugarcane industry were cleared at the end of 2017 when the new season began, and enterprises still had high levels of inventory. Although the market price was at its lowest at over VND12,000 per kilogramme, producers still failed to sell.
At this time, the inventory was approximately 200,000 tonnes of sugar.
Explaining this situation, the Vietnam Sugar Association (VSSA) said that customers waited until early 2018 to buy inexpensive imported products from other ASEAN countries, including Thailand.
In addition, if the situation continues, sugarcane farmers will not be able to sell materials to processing plants at high prices as the plants only need to import raw sugar and invest in a coal-fired boiler that can produce quality products. Therefore, when the sugar market is unfavourable, farmers will face difficulty, VSSA added.
Seedlings
Chairman of VSSA Pham Quoc Doanh told danviet.vn that to solve the industry’s difficulties at the roots, the most important thing was to raise the quality of sugarcane seedlings.
“Firstly, we need quality seedlings which will be developed nationwide, and at the same time we also need seedlings that are suitable with ecology of every area. Thailand has more than 12 million hectares of sugarcane, but there are only two key varieties accounting for 70 per cent of the total,” said Doanh.
Secondly, after we have key seedlings, we must focus on the production of seedlings. This step is still weak with farmers currently making seedlings themselves. Factories should help farmers by providing all sugarcane growing areas with qualified seedlings from factories in order to obtain high capacity and high quality,” he added.
He said the factories needed to stick with farmers, have policies to take care of quality sugarcane growing areas, share benefits and associate with them in order to develop these areas in sustainable and cost-saving ways.
Management decrees
According to the VSSA, it is right time to have a legal corridor, including decrees or laws, to manage the operation of the sugarcane industry. Countries in the world all manage sugarcane through laws.
To manage seedlings, Doanh said that the Government needed to ensure that the agriculture sector and sugarcane industry stop seedling production by farmers, re-organise the system of seedlings production to have key seedlings by 2020.
The State should encourage farmers by helping them open farms and establish co-operatives which are seen as a link between businesses with farmers, Doanh said. — VNS