Not blindly protect the sugar industry

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1034 4727 17 2657 mia YYYng - Not blindly protect the sugar industry
The sugar industry needs to be honest with itself, avoid blaming smuggled sugar, and integration for impacting the whole industry.

“Lifesaver”

Nearly five months after applying anti-dumping tax and anti-subsidy tax on a number of cane sugar products originating from Thailand, Vietnam’s sugar industry has made certain improvements.

Nguyen Thanh Tung, Deputy General Director of KCP Vietnam Industry Co., Ltd (a company with 100% Indian capital, established in 2000 in Phu Yen) affirmed that the tax imposition is a “lifesaver” for the sugar industry.

“The sugar industry is currently affected by the ASEAN Trade in Goods Agreement (ATIGA), which imports sugar without quotas in the ASEAN region. In which, Thai sugar is supported and dumped. Thanks to the decision to impose anti-dumping and anti-subsidy taxes, this year’s sugarcane pressing season was better, the highest price of raw cane was VND1.4 million per ton. Sugarcane farmers are profitable and can compete with other crops,” Tung said.

Vo Van Ut, a sugarcane farmer in Son Hoa district, Phu Yen province, said that, the 2008-2012 period was very favorable, farmers even bought cars thanks to sugarcane.

In the 2015-2019 period, farmers were devastated by natural disasters and droughts, causing poor productivity. In the 2020-2021 crop year, the weather was more favorable, especially thanks to the imposition of anti-dumping tax on Thai sugar, farmers feel secure in production.

“Our farmers are now ready to compete fairly with ASEAN sugar. We have been able to access agriculture through smartphones and computers,” said Ut.

Besides the flourishing factors, Director Bach Van Son of Hau Giang’s Subdepartment of Crop Production and Plant Protection province spoke of problems of the sugar industry. In Hau Giang, before 2010, sugarcane was the main crop.

However, since 2015, the area of sugarcane has gradually decreased, from more than 15,000 hectares to more than 5,000 hectares in 2020. The whole province currently has only one sugar factory in operation. “Notably, smuggled sugar still causes many difficulties for the local sugar industry; we recommended to control smuggled sugar, strictly enforce the decisions on anti-dumping and subsidized Thai sugar,” Son said.

Nguyen Thanh Tung proposed to the Ministry of Industry and Trade to soon complete the investigation and apply measures to combat trade remedy evasion for cane sugar products originating from Thailand through countries such as Laos, Cambodia, Indonesia, Malaysia and Myanmar which are imported to Vietnam with unfair competition; it is necessary to control smuggled sugar and liquid sugar.

Paying special attention to the issue of fertilizers, Vo Van Ut suggested that the State should control fertilizer prices, because the current price of fertilizers is too high, causing many difficulties for farmers. “One bag of urea increased more than two times, to more than VND800,000 per bag,” Ut said.

No blind protection

Affirming that sugar cane is an industry of particular interest to the Government, Deputy Minister of Industry and Trade Tran Quoc Khanh said that this is an industry that has received support since the 1990s. The government has worked to protect the industry from international competition for the past 25 years. It will not be until 2020, when Vietnam will open the sugar market to other countries.

The opening to the ASEAN market started from January 1, 2020. Then cheap Thai sugar flooded in and just nine months later, the Vietnam Sugar and Sugarcane Association (VSSA) collected data. Soon after, the Ministry of Industry and Trade launched an anti-dumping and anti-subsidy investigation on Thai sugar. In February 2021, the Ministry of Industry and Trade decided to temporarily tax and by June 2021, the official tax rate would be 47.64%. “This is an unprecedented decision in the history of the ASEAN sugar industry as well as the world sugar industry because no country has taxed sugar. This is not to say to protect domestic sugar, but to re-establish a competitive environment,” said Deputy Minister Tran Quoc Khanh.

Notably, the Ministry of Industry and Trade also predicts that if Vietnam imposes anti-dumping tax on Thai sugar, it will be possible for this country to bypass other ASEAN countries to enter Vietnam. Therefore, the Ministry of Industry and Trade asked the VSSA to study the situation. By September 2021, on the basis of VSSA’s official request, the Ministry of Industry and Trade has launched an anti-circumvention investigation with Thailand’s sugar through ASEAN countries into Vietnam.

“The Ministry of Industry and Trade will evaluate the data and make a legal decision. Regarding specific steps, the Ministry of Industry and Trade has actively supported and accompanied businesses and farmers. The highest goal is to consume all the sugarcane for farmers and ensure a profitable crop. In the near future, the Ministry of Industry and Trade will do everything within the scope of the law to support the sugar industry in Vietnam,” Deputy Minister Tran Quoc Khanh said.

However, leaders of the Ministry of Industry and Trade also said that the sugar industry needs to be honest with itself, avoiding blaming integration for impacting the whole industry. It must be recognized correctly in order for the State to make the right policy, or else it will design the wrong policy. In addition, the solution must balance legitimate rights and interests. If favoring one interest group, the policy will fail. “The position of the Ministry of Industry and Trade is not to blindly protect the sugar industry, restore business order and legitimate interests,” said Tran Quoc Khanh.

The Ministry of Industry and Trade proposes to separate the sugarcane industry from the sugar industry, not to equate it because of its different nature, not necessarily interdependence.

Farmers who do not make sugarcane can do something else more efficiently, so as not to become too dependent on sugar mills. But factories without sugarcane will definitely go bankrupt, so factories must consider farmers as customers and cooperate in the highest spirit so that they can continue to accompany them. In particular, businesses need to offer a reasonable purchase price for farmers because the average purchasing price is about VND1 million/ton at present, which is not high. Farmers also have to know the price of sugar to have a basis to negotiate with businesses.

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