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The struggle around 70,000 tons of cheap sugar   2012-07-16 - VietNamNet

Food processing companies have accused sugar companies to restrict sales to push the prices up, insisting the Ministry of Industry and Trade to grant quotas to import sugar. Meanwhile, sugar companies have affirmed that no need to import sugar, because the domestic output can satisfy the demand.


According to the Vietnam Sugar and Sugar Cane Association VSSA, food processing companies have made such a complaint in order to be able to get the quotas to import sugar at low prices.

With the preferential import tariffs, the imports would be cheaper by 4000-5000 dong per kilo than domestic products. With the total quota of 70,000 tons for 2012, Vietnam would save at least 280-350 billion dong if it imports sugar.

Food processors keep complaining

Truong Phu Chien, Director of Bien Hoa sweet company, said in previous years, the Ministry of Industry and Trade announced the quotas for the years prior to March. The early quota allocation would help businesses well program their business and import plans.

In general, the demand for sugar increases sharply on mid-autumn festival days (September) and Tet (January or February).

However, Chien said, to date, the sugar import quotas have not been allocated so far this year, even though the sugar crop finished two months ago and sugar finished products have been put in trade companies’ storehouses.

Since food processors still cannot import sugar under the quota scheme, they have to buy sugar from domestic companies to serve their production. Therefore, trade companies are making the corrupt use of this to impose their terms on food processing companies.

Trade companies have every reason to do that, because though the supply has been stable, the demand is quite different at different moments.

Also according to Chien, if comparing the current prices with the prices of the same period of the last year, food processors have to buy domestic sugar products at the prices higher by 5000 dong per kilo, which is nearly equal to the retail price.

Bibica, for example, is buying refined sugar at 19,000 dong per kilo, white RS sugar at 17,500 dong per kilo. Meanwhile, the import sugar price would be 13,000-14,000 dong per kilo after 5 percent tax.

“We still have to buy domestic products, because the allocated quota is not big enough. However, the problem is that we meet big difficulties when dealing with domestic sugar plants, because they refuse to sell in big quantities,” Chien said.

An executive of Vinamilk said the dairy producer needs 113,201 tons of sugar in 2012, while VInamilk proposed the Ministry of Industry and Trade to allocate quotas to import 75,000 tons of sugar in late 2011. However, to date, the company has not got replies.

Vinamilk’s Public Relation Manager Bui Thi Huong said the company has to buy 57,014 tons of sugar so far this year at the prices higher by 35 percent than the world prices. Meanwhile, sugar plants do not intend to boost sales.

Sugar plants affirm no need to import sugar

Nguyen Thanh Long, VSSA’s Chair, said that with the big price gaps, importing sugar proves to be a lucrative business that every enterprise want to take.

“This explains why domestic food processors only sign contracts with sugar plants on buying sugar until July,” Long said. “After that, they would reason the high price and low quality to refuse to buy sugar from domestic plants, while complaining to the Ministry of Industry and Trade and insisting on import quotas.”

“One cannot say Vietnam is lacking sugar. There are 60,000-70,000 tons of sugar ready for sales. Meanwhile, the inventory volume has reached 314,000 tons,” Long said.

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