The truth about sugar prices

Even though the amount of sugar stockpiled in the country has reached 110,000 tonnes, enterprises that use sugar in their production operations are finding it difficult to access it. Do sugar suppliers deliberately speculate to drive the prices of domestic sugar up, even higher than those of imported sugar?

Sugar prices keep rising

The price of refined sugar on September 23 in the Big C supermarket in Da Nang City fluctuated at between VND14,400 and 16,800 per kilogram. The price of domestic sugar is VND2,500-3,000 per kilo higher than the price of imported sugar.

According to an industry analyst, since May 2009, the price of refined sugar has continuously risen from VND9,000/kilo to VND10,500/kilo. By August, sugar prices had surprisingly reached VND13,000-14,000/kilo, up 33.3%. From early September until now, the price of refined sugar in the shops has stayed at between VND15,000-16,000/kilo. Compared to the beginning of this year, sugar prices have gone up by 50-65%.

The reason for a continuous rise in sugar prices is that sugar production worldwide in 2008-2009 fell sharply, leading to a lack of 4.2 million tonnes for the consumer market. This shortage has resulted in sending sugar prices soaring by 60.2% in the world market from the beginning of the year.

In the domestic market, due to the limited supplies, sugar prices have also jumped. Therefore, after agreeing with the Ministry of Agriculture and Rural Development (MARD), the Ministry of Industry and Trade (MoIT) decided to import an additional 40,000 tonnes from August 17, plus 15,000 tonnes from the quota and 22,000 tonnes in stock. This will increase the total amount of sugar available (not including sugar from the new crop in September) to 77,000 tonnes.  

Ha Huu Phai, General Secretary of the Viet Nam Sugarcane and Sugar Association, said that the amount of sugar in stock is now 110,000 tonnes. However, why is the domestic price of sugar still rising, while several milk companies are running short of sugar?       

Some sugar enterprises speculate

There are now about 10 companies that have stocked up on sugar, with the highest volume estimated at 13,000 tonnes and the lowest at 2,800 tonnes. Nevertheless, these companies don’t want to sell their sugar, leading to a scarcity of sugar in the market.

Some experts say one reason is that sugar enterprises don’t want to sell large amounts as they prefer to sell their goods at higher retail prices. Another reason is that companies signed a fixed time-limit contract earlier this year when sugar prices were still low. Now the price of sugar is up, the retailers and the manufacturers can’t arrive at an acceptable price. Some sugar enterprises don’t want to carry out their contracts, preferring to accept a fine, then sell the sugar to someone else at a higher price.                       

Vietnam shouldn’t import more sugar

To solve the sugar supply and demand issue, the MARD, the MoIT and businesses met on September 22. They agreed to allow big enterprises to import sugar as long as the amounts involved are below 10,000 tonnes.

However, some enterprises complain about the lack of sugar and demand to be allowed to import more simply for their own interests. Because the global price of sugar is cheaper than Vietnam’s, they want to import to raise their profits. However, companies producing milk, candy and soft drinks are finding themselves in a delicate predicament because domestic sugar prices keep increasing and the supply is unstable. So, a reasonable adjustment is needed to ensure the interests of farmers, businesses and the consumers.

According to MARD’s calculations, from mid-October, sugar supplies will be in excess of demand. The amount of sugar in the retail market is predicted to reach a maximum of 81,800 tonnes from September 15 to October 15.

Meanwhile, the amount of sugar in stock in factories is now 58,700 tonnes, plus 40,000 tonnes of supplementary imports and 50,000 tonnes from the domestic sugar production output. Hence, the amount of sugar in the domestic market will be 70,000-80,000 tonnes more than is needed.