A worker packs refined sugar at the Son Duong Sugar and Sugarcane Joint Stock Company in northern Tuyen Quang Province. Sugar prices remain high, despite Government approval for the import of 100,000 tonnes of sugar. – VNA/VNS Photo Vu Sinh

HCM CITY (Biz Hub) — Government approval for importing 100,000 tonnes of sugar will help meet demand in the local market, but cannot bring down prices because the distribution system is poor, economists say.

The prolonged drought has had a great impact on the sugar industry, with sugarcane production falling for the last two years.

Do Thanh Liem, deputy chairman of the Viet Nam Sugarcane Association, said this year's sugar supply would only reach 1.2 million tonnes, a whopping 1.4 million tonnes less than last year, pushing up retail prices.

From VND13,000 per kilo last year, they have shot up to VND17,000-21,000.

This has persuaded the Government to approve the import of 100,000 tonnes as recently suggested by the Ministry of Industry and Trade.

"However, the import … cannot help lower sugar prices immediately," Liem said.

Sugar prices are high in the world market and so import prices will be high, he said.

Vu Vinh Phu, chairman of the Ha Noi Supermarket Association, said the diminished supply is not the main reason for the price increase.

Locally produced sugar can meet 70-80 per cent of the demand, while the remaining 20-30 per cent is met by illegal imports from Thailand, he said.

"Poor distribution has forced sugar prices up. The production costs range from VND13,000 to VND14,000 per kilo, but it is sold for VND19,000 at traditional markets and VND20,000–21,000 at supermarkets.

He said the distribution channels should be improved and intermediaries should be eliminated to bring sugar directly from the refineries to retailers.

"Furthermore, sugarcane growers should be paid better so that they do not chop sugarcane when prices go down."—VNS