Vietnam: Big surplus sends sugar prices plunging

HA NOI — A sugar surplus of 400,000 tonnes, as well as a Ministry of Industry and Trade move to allow some major beverage companies to use imported sources of sugar, is causing the bottom to drop out of the domestic sugar market and creating difficulties for both cane farmers and sugar mills in the Cuu Long (Mekong) Delta region, according to the Viet Nam Sugar and Cane Association.

The Ministry of Industry and Trade authorised the import 248,000 tonnes of sugar this year, a quota mostly allocated to enterprises that produce milk products and soft drinks that insist on using lower-priced imported sources, said association chairman Nguyen Thanh Long.

Meanwhile, domestic sugar prices have fallen by about VND1,000/kilo. Offered at only VND18,500/kg, it's still difficult to sell it, said Long.

The mills with the greatest surpluses on hand include the Tay Ninh Sugar Mill, with 50,000 tonnes; Viet-Dai Sugar Mill, with 30,000 tonnes; Lam Son Sugar Mill, with over 51,000 tonnes; and the Khanh Hoa Sugar Mill, with 29,000 tonnes.

"We have about 5,000 tonnes of sugar in stock," said Ben Tre Sugar Joint Stock Co general director Nguyen Thanh Son. "We have to accept a high interest rates from banks while borrowing VND2.5 billion (US$120,000) per day to buy sugar cane as raw material to produce sugar."

The Phung Hiep Sugar Mill also has nearly 10,000 tonnes of sugar in stock, according to the mill's director, Pham Quang Vinh.

The more sugar is kept in stock, the more companies have to pay in interest costs, since the capital used to produce the sugar remains tied up in the stockpile, Long said.

In response to the problem, Deputy Minister of Industry and Trade Nguyen Thanh Bien said that the ministry would co-operate with other ministries, the association and sugar mills to adjust sugar imports under existing quotas.

(Source: http://vietnamnews.vnanet.vn/Social-Isssues/210273/Big-surplus-sends-sugar-prices-plunging.html)