Confectionery and beverage producers are asking the Ministry of Industry and Trade to import 270,000 tons of sugar instead of using locally-made sugar because of the latter’s higher price.
Sugar manufacturers and their consumers on Wednesday sat back together in HCMC to look for ways to solve the deadlock, but the rift remained deep between the two sides.
Local output, according to the meeting convened by the Vietnam Sugarcane and Sugar Association, is about 1.4 million tons in the 2011-2012 crop, increasing by 300,000 tons compared to the preceding crop.
Coupled with 100,000 tons stockpiled since last year, sugar makers are suffering from a serious oversupply, said Nguyen Thanh Long, chairman of the association.
Very few local sugar makers – such as Bien Hoa and Bourbon Tay Ninh – have secured contracts to sell sugar to local confectionery and beverage makers, while many large consumers are seeking approval to import sugar for their production, he said.
“Vinamilk, Kinh Do, Bibica and Red Bull and other firms insisted on importing around 270,000 tons of sugar while a large number of local sugar suppliers couldn’t find a way to approach these corporate buyers,” Long said.
Bibica’s general director Truong Phuc Chien cited the big difference between local and import sugar prices as the reason behind his sugar import plans.
Imported sugar is priced at only US$700 a ton, or roughly VND14,700 per kg, while local sugar enterprises charge much higher prices, at up to VND17,000 a kg.
“We have no reasons to buy local sugar at such unreasonable prices compared to import products,” Chien said. Bibica needs about 6,000 tons of sugar every year.
According to Mai Hoai Anh, who is in charge of purchasing and import-export of Vinamilk, the sugar demand at his company is growing between 15% and 20% a year.
However, price volatility in the local market during the past five years has discouraged Vinamilk from buying locally-made sugar with large volumes, Anh said.
Ha Quang Tuan, chairman of Hanoimilk, pointed out that the average production cost of sugar at local enterprises was as much as VND14,500-15,500 one kg, equivalent to sugar prices traded on international markets.
With the present high price, local sugar suppliers are unable to win large buyers like Hanoimilk, Vinamilk, Tan Hiep Phat or Coca Cola.
This year’s sugar import quota is limited to 70,000 tons in line with the country’s commitment to the World Trade Organization. This is 200,000 tons lower than the amount demanded by the market, Deputy Minister of Industry and Trade Nguyen Thanh Bien said.
What local buyers and suppliers need to do now is reach an agreement about sugar prices.
Based on the negotiation result between the two sides, the ministry will decide the 2012 import quota, Bien said.
To help solve the situation, the sugar association is seeking approval from the Ministry of Agriculture and Rural Development to export unneeded sugar and to store 200,000 tons temporarily.
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