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Overview of Vietnam’s sugar industry: 20-year record low output

Overview of Vietnam’s sugar industry: 20-year record low output

Thursday 18, 11 2021
The production of the 2021-2022 sugarcane crop 2021-2022 was 689,830 tons, which is lower than the output of the previous crop and the lowest level in the past 20 years.

Massive imports from Thailand

According to the Vietnam Sugarcane and Sugar Association (VSSA), smuggled sugar and sugar imported from many countries in the ASEAN region by violating anti-subsidy and anti-dumping regulations are the main reasons for the continuous decline in Vietnam's sugar industry.

Vietnam Sugarcane and Sugar Association

A representative of VSSA said that the area and output of sugarcane and domestic sugar production have decreased continuously in recent years under the direct impact of smuggled sugar and subsidized sugar from Thailand, the largest sugar manufacturing country in the region.

Not being subject to taxes such as import tax, VAT, out-of-quota tax and enjoying price subsidies from the home country, imported sugar has been imported into Vietnam at a cheap price, causing damage to domestic sugar industry.

As domestic sugar factories could not compete with imported sugar, they had to reduce the purchase price of sugarcane from farmers.

feedback of domestic sugarcane

In response to the feedback of domestic sugarcane enterprises and VSSA, on February 9, 2021, the Ministry of Industry and Trade issued Decision No. 477/QD-BCT applying temporary anti-dumping and countervailing duties to a number of cane sugar products originating from Thailand.

Impact from anti-dumping and anti-subsidy policies on imported sugar

The report Vietnam’s sugar industry by SSI said that the implementation of anti-dumping and anti-subsidy tax (AD&AS) on sugar imported from Thailand has begun to show some results for the domestic sugar industry. According to the Vietnam Sugarcane Association (VSSA) and QNS, the price of domestic white sugar has increased by 41% year-on-year, along with a 40% year-on-year decrease in imported sugar in the second quarter.

Since the imposition of the tax, the volume of sugar imported from Thailand has dropped to the lowest level of 15 thousand tons in June compared to the highest level of 183 thousand tons in April 2020. Smuggled sugar has been strictly controlled because Vietnam closed its border to control the Covid-19 epidemic.

However, after the anti-dumping and anti-subsidy taxes on Thai sugar were applied, the amount of sugar imported from 5 other countries in ASEAN including Cambodia, Laos, Malaysia, Myanmar and Indonesia into Vietnam has increased dramatically.

imports of sugar

Specifically, in the first 7 months of 2020, imports of sugar from the 5 countries mentioned above increased from 71,583 tons to 475,985 tons in the first 7 months of 2021, which is more than 6 times higher than the same period in 2021. A VSSA leader said that all of the above-mentioned countries, except for Laos, had never exported sugar to Vietnam before 2019.

The expansion of sugarcane acreage is very important for the development of the domestic sugar industry in the coming years, as the high import tax on raw sugar may discourage domestic mills from importing raw sugar for fine.

Source: VSSA, SSI

 

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