Workers process sugarcane at a Hau Giang-based company. Domestic sugar producers are facing difficulties with low prices, high inventories and illegal imports from China. — VNA/VNS Photo Duy Khuong

HA NOI (Biz Hub)— Domestic sugar producers are facing low prices, high stockpiles, and illegal imports from China, said the Viet Nam Sugarcane and Sugar Association (VSSA).

At a conference to review the first six moths of the year in Ha Noi on Wednesday, Doan Xuan Hoa, deputy head of the Department of Processing and Trading Agricultural Forestry and Aquatic Products, said the country's sugarcane covered 298,000 hectares.

Hoa said producers still bought sugarcane at the high price of VND1 million per tonne although selling prices were VND2,000-3,000 per kilo lower than last year.

"This was the highest buying price in the area. If producers did not buy at the price, farmers would not plant sugarcane and the factories would face shortages," he said.

He said the sugar industry had established concentrated production areas and had close links to farmers.

Producers tried to buy sugarcane at high prices despite decreasing sugar consumption to help farmers retain their planting areas.

However, the sector faced a paradox. Farmers' incomes were still low despite high prices.

In addition, local sugar prices were much higher than other countries in the region.

Nguyen Thanh Long, VSSA's chairman said the reason was that Viet Nam's businesses had high production costs.

Long said high buying prices and imported chemicals used in sugar production contributed to the higher prices.

He added that the sector had struggled to stop illegal imports of sugar from China.

"While locally made sugar is being illegitimately exported, a large volume of foreign sugar is being illegally imported into Viet Nam, putting increasing pressure on local producers," he said.

Do Thanh Lam, deputy head of the Ministry of Industry and Trade's Market Management Department, said figures showed that authorities had seized 1.3 million tonnes of sugar since 2010.

In the first half of the year, the department seized 362 tonnes of sugar in southern An Giang Province.

Meanwhile, the volume of unsold sugar at local plants totalled about 490,000 tonnes in June, lower than the peak level of about 579,800 tonnes in May but still high compared to the same period in 2012.

The association forecast the total yield of the sugar crop for 2012-13 would be a record of more than 1.5 million tonnes while local demand is put at 1.3-1.4 million tonnes this year. — VNS