Vietnam’s sugarcane production will face tough challenges when the
tax rate cut down to zero percent by 2015, according to the Vietnam
Business Forum Magazine (VBF).
According to calculations, the cost of sugarcane production in Vietnam is the highest level in the world.
If a timely and effective solution is not found, thousands of
households and businesses in the sector will be miserable, said Nguyen
Trong Thua, Head of Agro-forestry-fisheries and Salt production
Department under the Ministry of Agriculture and Rural Development.
According to Chairman of the Vietnam Sugarcane Association Nguyen Van
Loc, there are now more than 310,000 hectares of sugarcane. From 2009 –
2010 crop year to present, the country’s sugarcane output has increased
steadily, reaching an average of 200,000 tonnes per year.
Particularly
in 2013 – 2014 crop year, sugar production reached the record of 1.6
million tonnes. In this crop, sugar productivity reached the highest
level ever of 5.47 tonnes a hectare.
Loc said that
the sugarcane cultivation areas are scatter while technology for
manufacturing process is very poor. Besides these, manual harvesting
and transport which have not followed proper technique has led to the
loss of 10-15 percent of the sugar, while the loss percentage in other
countries has accounted for only 1-2 percent.
Loc added that
comparing competitive advantage in this industry between Vietnam and
Thailand , the gap is quite large. Specifically, while the cost of
land rent is higher in the South-East of Vietnam than in Thailand ,
Thailand has lower fertilizer costs, higher sugar yield and lower
sugarcane purchase price. In Thailand , they harvest sugar at foot
with no impurities; ripe sugarcane is with no exposure time and
transported by mechanical means so the loss is just under 5 percent. In
Vietnam , farmers harvest young sugarcane by hand; transport time
takes between 24 and 48 hours and led to the loss of 15-20 percent of
sugar in sugarcane. These factors have pushed up the price; therefore
there must be solutions to reduce production costs and increase
productivity so that Vietnamese sugarcane can be able to compete.
According
to Loc, the issue of development plan of Vietnam ’s sugarcane
industry is that the price is too high while competitive capacity
remains low. Although the sugarcane yield reached 64.2 tonnes a hectare
on average during the 2013-2014 crop, only 10 percent of material area
reached the level of productivity of the region and currently 42 percent
of the raw material areas of Southeast region is at risk of turning
into other crops due to low sugarcane yield.
One important
reason is that existing sugar processing technology in Vietnam is
still too backward, leading to low productivity. Currently, Vietnam ‘s
sugarcane yield is only 5.47 tonnes per hectare while in Thailand and
Australia it is 8 and 12 tonnes per hectare, respectively. These
restrictions have led to limited income for Vietnamese farmers.
Specifically, according to the Vietnam Association for Sugarcane,
sugarcane profits of the Southeast region and the central Highlands is
5,16 million VND and 8,432 million VND per hectare, respectively while
it is 20,645 million VND per hectare in Thailand.
As an expert,
Prof. Dr. Vo Tong Xuan said that to cut the production cost, Vietnam
needs to deploy automatic sugarcane irrigation system as it is one of
the most important factors to improve the productivity of sugarcane.
In addition, farmers and businesses need to calculate when applying
science and technology in choosing sugarcane breed for stable
development of the sugarcane cultivation areas.-VNA