Sizeable imports of corn syrup as well as a bumper 2023/2024 sugarcane harvest will ensure sugar oversupply this year, in general, and the Tet season, in particular.
Nguyen Van Loc, chairman of the Vietnam Sugarcane and Sugar Association (VSSA), also told The Investor that production has recovered thanks to active policy support from the government.
The second largest sugar producer in the country, Quang Ngai Sugar JSC, reported large profits in the first 10 months of 2023 with total revenue reaching VND8,800 billion (360.95 million), up 22% year-on-year. Pre-tax profit reached VND1,900 billion ($77.93 million), up 72%.
Son La Sugar JSC also recorded its best performance of the past five years, with revenues of VND1,715 billion ($70.34 million) and after-tax profits of VND523.1 billion ($21.45 million), exceeding 595% of the company’s plan for the crop year 2022-2023 (July 1, 2022 to June 30, 2023).
Harvested sugarcane in Hau Giang province, Mekong Delta, southern Vietnam. Photo by Theinvestor/Thien Ky.
Loc said 2023 was a relatively favorable year for the Vietnamese sugar industry as it completed the 2022/2023 season in June 2023. At the end of the season, sugarcane output was over 9.6 million tons and 935,104 tons of different sugar varieties were produced.
Sugarcane and sugar output increased 128% and 125%, respectively, compared to the 2021/2022 season; and by 143% and 136%, respectively, over the 2020/2021 season.
“The reason for production growth in two consecutive seasons was the trade defense measures that the Vietnamese government has applied since 2021. On that basis, the sugarcane purchase price has increased continuously.
“The price of VND1.1-1.3 million ($53.3) per ton of sugarcane is equivalent to that of other countries in the region, leading to an increase in sugarcane planting area. The results show that the sugarcane industry in Vietnam has made a significant recovery,” Loc said.
He added that in 2023, world sugar prices increased by 60% compared to the lowest price of the 2019/2020 crop, leading to an increase in the prices of imported domestic sugar. Over the last three years, domestic sugar prices have increased but are still at a low level compared to neighboring countries.
Loc said sugar supply will be abundant in 2024, including what is officially imported and smuggled across the Southwest border.
“Worldwide sugar prices may fall, leading to a decrease in domestic sugar prices that will remain low compared to prices in the region’s sugarcane-growing countries including Indonesia, the Philippines and China,” he added.
The output from the 2023/2024 crop year will be even higher than the previous one with harvested sugarcane area increasing 112% to 159,159 hectares. The estimated processed sugarcane output is more than 10.5 million tons, an increase of 109%, and the estimated sugar output is more than a million tons, an increase of 110%. Domestic production currently accounts for just 30% of Vietnam’s total sugar supply, according to VSSA data.
Loc said that to ensure sustainable development, the sugar industry needs appropriate measures to strengthen the sugarcane production chain, especially in the context of competition between sugarcane and other crops.