The sugar “fever” of 2008 is supposed to recur as sugar reserves are dropping to a low level while imports are in a fix on account of rising sugar prices in the world.

Resuming sugar imports?

By the middle of July mills in the country had produced nearly 1.15 million tonnes of sugar, including 1.05 million tonnes for domestic consumption and 100,000 tonnes for export to China in March. Hence only 300,000 tonnes of sugar have remained in stock, far too short of meeting the growing consumer demand.

The Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade and the Vietnam Sugar Association (VSA) have agreed to raise the quota on sugar imports to around 250,000 tonnes, but businesses could only have imported 93,000 tonnes by far.

The tax paid price of white sugar delivered from mills is VND18,300-18,500 per kilo while the price of sugar exported to China has dropped from VND21,000 to VN19,000 per kilo.

Tran Thi Mieng, Deputy Director of the Department of Processing and Trade for Agro-forestry-Fisheries Products and Salt Production, says with the level of supply at the moment estimated at 450,000 tonnes a “fever” might appear in October or November.

Mieng proposes that the government allow businesses to continue importing sugar in order to prevent speculative activity.

Unreasonable regulation

However, as the price of sugar on the world market has hit a record high, many businesses have to stay put. For instance, refined sugar on the London Trading Floor on July 13 showed an increase of US$19.6 to US$876.3 per tonne (approximately VND18,000 per kilo). The VSA has announced that sugar supplies from Brazil which account for 54 percent of the global volume are shrinking because of a sharp decline in productivity.

Nguyen Thanh Long, VSA President forecasts that the price of refined sugar will surpass US$900 per tonne (around VND18,500 per kilo) soon.

Against this backdrop many domestic businesses are finding themselves in a spot unable to fill the signed contracts.

Pham Thi Sum, President of the Board of Directors of Bien Hoa Sugar Company which has already fulfilled its quota, says there is not much sugar left in stock.

Food processing businesses also fare no better. Doan Manh Dung, General Director of Hai Ha-Kotobuki Company, says the company is permitted to import 500 tonnes of sugar, but the price on the world market is so high now (around VND22,000-VND23,000 per kilo). In April when the price fell to VND15,000-16,000 per kilo the VSA put a stop to sugar imports. Now, if businesses import sugar they will suffer a great loss of profit.

In Sum’s view, relevant agencies should strictly control the amount of sugar exported to China. If not, the lesson of the 2008 sugar “fever” will be repeated.