Sugar cane growers, sugar producers see small gains on horizon
Source: 01-SEP-2008 Intellasia | Thanhniennews
Sep 1, 2008 - 7:00:00 AM Despite a promising bumper crop, Mekong Delta sugar cane growers are likely to encounter difficulties as sugar mills are struggling to buy the commodity at profitable prices.

Under the Ministry of Agriculture and Rural Development (Mard)'s direction, 10 sugar mills in the Mekong Delta region will resume operation starting from the middle of next month to October to ensure all sugar cane output will be purchased.

In Hau Giang Province, currently the region's sugar cane hub, about 200,000 tonnes of cane is expected to be harvested next month before the flood season.

Representatives of some sugar plants at a recent meeting in Hau Giang Province said at their current capacity, purchasing the entire harvest would not be a problem if the sugar consumption market was healthy.

But they said it would be difficult to fix the purchase price to ensure at least 40-% profit for cane growers as prime minister Nguyen Tan Dung had requested, and still make profit for the sugar factories.

Le Xuan, head of the Department of Agro-Forestry Product Processing and Trade under Mard, said sugar mills should buy sugar cane at 500,000 dong (US$30) or higher per tonne.

But Xuan admitted the market, not the government, would decide the purchasing price.

Sugar mill representatives said this year's market for sugar cane products is below expectation.

With the current retail sugar price at between 8,000 dong and 8,300 dong (US$0.48 -US$0.5) per kilogram, Can Tho Sugar Co general director Nguyen Thanh Long said it would be difficult to raise the retail price next month as sugar stocks remain plentiful and mills regularly release additional supplies into the market prior to engaging in new sugar production.

Supply in the global sugar market is expected to exceed demand, Long said.

In addition, smuggled sugar along the Vietnam-Cambodia border is still on the rise, hampering the ability of sugar mills to increase retail prices.

If sugar plants purchased sugar cane at 500 dong (US$0.03) per kilogram to ensure a 40-% profit for growers, the plants would suffer losses with the current retail sugar price, Long said.

Nguyen Xuan Trinh, deputy chair of the Vietnam Sugar Cane and Sugar Association, said sugar mills and cane growers are both facing hard times.

Trinh said equipment in many factories is outdated, while sugar cane growers are suffering from a spike in petrol and fertiliser prices, among other costs.

A sugar factory director in the Mekong Delta region suggested the government should assist sugar mills with preferential interest rates to buy harvests from farmers and prevent consumption difficulties such as the one occurring in the Pangasius (tra and basa catfish) market in the middle of this year.

But Xuan stressed sugar mills should share the burden with farmers by purchasing sugar cane at reasonable prices and cutting back on production costs.

He said a plan to assist sugar factories is expected to be implemented in October after Mard works out details with the banking sector.

The Mekong Delta is currently home to more than 64,500 hectares of sugar cane.