VietNamNet Bridge – Sugar processing plants made profit in the last three full years (2004-2006) after a long period of suffering losses. Deputy Minister of Agriculture and Rural Development Diep Kinh Tan said that it was now believable that sugar plants would stay alive and develop.
What would you say about the 2006-2007 sugar cane crop?
 | | Deputy Minister of Agriculture and Rural Development | 2007 will be the fourth consecutive year that sees local sugar processing plants make profit. The gap between regional and domestic prices has been narrowed; therefore, sugar smuggling is not a headache for state management authorities any longer.
Material growing areas have been developed well with the sugar cane growing area increasing by 20%. Sugar plants have been running at full capacity. However, several plants are still facing difficulties as they did not pay appropriate attention to material area development.
Seven sugar companies are still under restructuring, four of which are eligible for equitisation, three other are in big difficulties, namely Thoi Binh, Kon Tum and Son La. One sugar company, Kien Giang, may be dissolved as it was shut down in 2006 due to lack of materials.
You said that more than 90% of sugar companies make profit. However, some experts said that the figure remains unachievable as the sugar volume kept in circulation is big, while the prices are fluctuating. What would you say about this?
The figures I have are not the final, so I cannot confirm 90% or more than 90% of sugar plants make profit. But I can assure you that the 90% figure is within reach.
Sugar plants have been paying special attention to material area development and production capacity raising, and thus can reduce production costs. I’ve been to many sugar plants. On average, every plant runs at the capacity of 1,000-1,500 tonnes of sugarcane a day, and makes the profit of VND10-15bil a year. Some of the plants even make higher profit, VND30-40bil.
I have to say that some plants are still facing financial difficulties, like Son La. It has been running at 180% of its designed capacity this year, but it still incurs losses as it has to pay interest on banks loans, while the interest from sugar processing is not high.
How has Decision 28 on equitising sugar plants helped the sugar industry? Can we now say that the misfortunes are past?
I can say that the decision has ‘untied’ the sugar industry. If the decision was not made, the sugar industry would die. Now 32-33 plants out of the existing 36 plants have made profit in the last three consecutive years. Though the sugar price once dropped to VND6,300/kg, sugar plants could still make profit.
The big gap between regional and domestic sugar prices has been narrowed. Thailand-made sugar is selling at VND5,000/kg, while Vietnam-made product is selling at VND5,500/kg. If domestic plants expand production and improve management skills, production costs will be even lower.
It is too early to talk about the possibility of exporting sugar. The task now for the local sugar industry is to dominate the domestic market, preventing foreign-made products from entering the market.
We have five years ahead before having to open the sugar market under WTO commitments. With the market opening roadmap, I believe that the sugar industry will stay alive.
The Vietnam Sugar Cane and Sugar Association has stressed the need of applying measures to encourage agricultural development and to reduce state owned capital contributions in sugar plants. What does MARD think about this?
Agriculture encouragement is fine because this does not violate WTO rules. In fact, MARD has been trying to do that, but the efficiency was low.
I have to stress the need to develop the material area. The Quang Ngai sugar plant, for example, saw the yield of 40 tonnes per hectare in the pre-liberalisation period. 40 years later, the yield is just a little higher, at 44 tonnes/ha, far below the average yield of the country at 54 tonnes/ha. Only by developing material areas well can sugar plants lower production costs.
Regarding equitisation, the Government does not intend to hold the controlling stakes, or even to make capital contributions in sugar plants.
Ha Yen | 
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