In recent years, the sugar industry has struggled with high inventories and plunging prices, in addition to pressure from imported and smuggled sugar. — File Photo

HA NOI (Biz Hub) — An import quota of 86,000 tonnes of sugar during 2016 in line with the World Trade Organisation (WTO) rules, coupled with possible imports from Laos, will continue to burden local producers.

According to the Ministry of Agriculture and Rural Development, sugar prices posted increases recently thanks to a drop in inventories to 40,000 tonnes from 100,000 tonnes.

The wholesale price was around VND15,000 (US$67 US cents) in mid-December, up VND10,000 compared to October. However, the Viet Nam Sugar and Sugarcane Association said that sugar prices would hardly increase in the coming months as sugar factories had planted a new crop since mid-month, which might soon push up inventories.

The Ministry of Industry and Trade would pilot the implementation of tenders for the sugar import quota next year, instead of it being allocated, as in the previous years, to ensure transparency. The association previously proposed that imports of raw sugar should be prioritised.

In recent years, the sugar industry has struggled with high inventories and plunging prices, in addition to pressure from imported and smuggled sugar.

In 2015, Viet Nam imported 81,000 tonnes of sugar within the WTO's quotas and another 50,000 tonnes sugar of Hoang Anh Gia Lai procured in Laos at the tax rate of 2.5 per cent.

TPP opportunities?

The demand for sugar from member countries of the Trans-Pacific Partnership (TPP) was estimated to be 9 million tonnes per year, offering great opportunities for the local sugar industry to expand its exports.

However, challenges would be huge as Viet Nam would have to remove tariffs on imported sugar under TPP within 11 years from the current rates of 25 per cent and 40 per cent for raw sugar and refined sugar, respectively.

Among the TPP member countries, the US, Mexico and Australia were major sugar producers.

Experts urged local industry to improve productivity and quality while cutting costs to be able to compete with imported sugar in the home market.

Nguyen Van Ngai, head of the Economics Faculty of the HCM City University of Agriculture and Forestry, said that it was time for the local sugar industry to improve.

The sugarcane plantation area in Viet Nam was estimated at around 300,000 hectares with an output of around 20 million tonnes. — VNS