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Vietnam sugar output drops 20 percent, pushing prices up   2009-09-10 - Thanh Nien, TBKTSG

A sugar shop at a market in Ho Chi Minh City.  
Vietnam obtained just 995,000 tons of sugar from the 2008-09 crop, 20 percent lower than the previous one, due to shrinking sugarcane area in the country.


The Ministry of Agriculture and Rural Development said the total sugarcane area for the 2008-09 crop that just ended was around 270,600 hectares, down 36,000 hectares from the previous crop.

The decline in output has seen local sugar prices surge last month, the ministry said.

According to the Vietnam Sugar Association, sugar prices in the country have risen by up to 65 percent this year and currently ranges from VND15,500 to VND16,000 per kilogram.

Nguyen Thi Minh Thai, CEO of Ho Chi Minh City-based Minh Tam Food Company, said local sugar producers could benefit from the surge in sugar prices, but cautioned that very high prices would turn consumers away, forcing them to buy smuggled sugar.

Thai was speaking Tuesday at a conference where members of the Vietnam Sugar Association discussed plans for the coming 2009-10 crop.

Bui Thi Quy, chairwoman of Van Phat Sugar Company, said smuggled sugar now retails at around VND12,000. “Considering such a large price gap, even the most loyal customers would find it hard not to switch to cheaper smuggled products,” Quy said. “That’s why I think the government should take measures to stabilize prices on the local market.”

Vietnam is expected to import a total 61,000 tons of sugar this year, according to the Ministry of Industry and Trade. With 18,000 tons imported so far this year, the ministry has allocated the remaining 43,000 tons among local businesses to ease the ongoing sugar shortage.

Local importers have purchased sugar mostly from Thailand to benefit from lower import duties. Sugar imports from ASEAN nations are subject to a tax rate of 10 percent only, compared to 60 percent on refined sugar and 25 percent on raw sugar imported from other countries.

Vietnam imported 58,000 tons of sugar last year, according to the government figures.

The Vietnam Sugar Association said sugar supplies in the world have also fallen short of demand this year by 4.2 million tons.

On the global market the sweetener has climbed around 65 percent this year due to the shortfall in sugar supplies. According to Bloomberg, India, the world’s second-biggest grower, had its driest June in 83 years while parts of Brazil, the largest producer, had four times more rain than normal.

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