Sugarcane shortage spurs rise in sugar prices

December 14, 2009
LookAtVietnam - A sugarcane shortage caused by natural disasters at home and abroad has led to a record high price for sugar on the domestic market.

According to the Ministry of Agriculture and Rural Development’s (MARD) Centre of Information for Agriculture and Rural Development, the current average sugar price has doubled to VND19,000-20,000 (US$1.03-1.08) per kilo on the retail market and to VND16,500 per kilo on the wholesale market compared to the same period last year.

Ha Huu Phai, general secretary of the Viet Nam Sugarcane and Sugar Association, said the average price for sugarcane in the Cuu Long (Mekong) Delta doubled to a record rate of VND1 million per tonne compared with the same period in 2008.

Le Van Dinh, deputy chairman of the Bourbon Tay Ninh Sugarcane and Sugar Joint Stock Co, said that normally the price of sugar would reduce at the start of the harvest. However, that rule would be broken this year.

“Almost 40 sugar factories nationwide have been forced into moderate production due to a serious shortage of raw material,” Dinh said.

Normally the sugarcane harvest begins in October or November and lasts until the following April or May. However this year, Dinh’s company, one of the largest sugar producers in the country, may not process sugarcane until mid-February 2010 due a lack of material. Storms in the central region, the largest cultivation area for the crop, affected sugar production and a rise in petrol prices had also contributed to the increased cost, Phai said. Nguyen Tri Ngoc, head of the ministry’s Cultivation Department, recently said that the growing area for sugarcane had to compete with other industrial trees, including rubber, coffee, pepper and cashews and didn’t bring in as much income.

According to the association, the domestic demand for sugar is estimated to reach 1.25 million per year but the output was only 900,000 tonnes in the 2008-09 crop.

Plans were made to import 104,000 tonnes this year but only 74,000 tonnes have been imported so far. An increase in the global price has impacted the import of the remaining 30,000 tonnes.

The world sugar price jumped from $529 per tonne in October to $620 per tonne currently, Phai said.

Two sugar processing factories, Lam Son and Viet Dai, started production this month. They will provide 2,000 tonnes of sugar per day, half of the country’s daily demand.

Phai said it was quite difficult to predict the price of sugar for 2010.

However, the association expected that domestic consumption would reach 1.5 million tonnes in 2010 and 2 million tonnes in 2020. Domestic production could potentially provide 1.13 million tonnes in 2009-10, he said.

VNN/VNS

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