Sugar industry: Lowering prices will not result in increased demand

DNHN - Sugar output from cane is falling in the context of a weak economic recovery and the existence of a considerable amount of smuggled sugar and sugar, officially imported sweeteners on the market.

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Businesses are currently concerned about losing money owing to dropping sugar prices. According to the VCBS sugar industry research report from the end of July 2022, the domestic sugar price has dropped by 8-10% from the high in the third quarter of 2021 and is presently down by 3% from the average in the second quarter of 2022.

According to the Vietnam Sugar Association (VSSA), selling prices at sugar mills remain low, making it difficult to balance production expenses. From the beginning of 2022 through the end of July, the sugar mill's selling price for refined sugar is between 18,000 and 18,400 VND/kg; 17,200-17,400 VND/kg for yellow sugar.

This year, the production of sugar generated from cane is decreasing due to the delayed recovery of the economy and the existence of a high volume of illegal sugar and sugar, legitimately imported sweets on the market.

According to VSSA, mills sought to lower the selling price of sugar to compensate farmers for sugarcane and invest in the next sugarcane harvest, but they were unable to increase sales volume.

Furthermore, an abundance of supplies from both legitimate and illicit imports flowed in, making it impossible for enterprises to sell items even when they were supplied below cost.

In truth, the sugarcane market has been dark for many years; many firms have had to close, resulting in a fractured raw material area, and thousands of farmers are in jeopardy owing to the loss of sugarcane income.

According to SSI, increasing sugarcane acreage is critical for the future growth of the sugar sector, as the high import duty on raw sugar inhibits domestic mills from importing raw sugar to refine.

The sugar business appears to be facing several challenges as the raw material cane acreage continues to shrink.

PV

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