Proposing to auction sugar import quota in Q3

Deputy Minister of Agriculture and Rural Development Tran Thanh Nam on May 28 sent a written response to Official Letter No.2702/BCT-XNK  dated May 17, 2021 of the Ministry of Industry and Trade on the management of sugar imports under 2021 tariff quota.

In the written response, the MARD said the situation of sugar production in the 2020/2021 season, according to the report of  the Vietnam Sugarcane and Sugar Association (VSSA) on May 8, 2021, as of the end of April Vietnam sugarcane industry pressed over 6.2 million tonnes of sugarcane , producing above 661,000 tonnes of sugar.

Sugar output in the  2020/2021 crop is estimated at about 700,000 tonnes, equivalent  to nearly 7 million tonnes of sugarcane (70,000 tonnes lower compared to the 2019/2020 season's 770,000 tonnes).

Also according to the report of the VSSA, in the first months of 2021, sugar prices raise sharply.6. Refined standard sugar  (RS sugar) increased from VND 13,500/kg to VND 16,800/kg (up VND 3,300/kg or 24.4% in March). Refined extra sugar  jumped  from VND 14,000/kg to VND 18,000/kg (an increase of VND 4,000/kg or 28.6% in March). As a result, the domestic farm-gate prices of sugar in 2020/2021 soared to VND 950,000-VND 100,000/tonne ( VN 50,000-VND 100,000/ton above the previous season)

According to data provided by the MoIT at a meeting on May 12.2021 between the two ministries, in recent years, sugar consumption ranged between 2.1 and 2.3 million tonnes annually. Sugar imports by the official channels in the first three months of this year averaged around 125,000 tonnes per month (January: 123,000 tonnes, February: 172,000 tonnes, March: 125,000 tonnes).

Based on the data on production and official imports above, the MARD said sugar supplies for domestic consumption in 2021 depend not only on domestic production but also significantly on imports by official channels in the coming time.Therefore, with domestic consumption of 2.1 -2.3 million tonnes of which sugar imports by official channels can provide 1.5 million tonnes (125,000 tonnes/month on average as the MoIT said at the meeting on May 12.2021) and supply from domestic production is about 700,000 tonnes as estimated by the VSSA because sugar inventory level can't be forecasted exactly at a certain time) , the total supply in 2021 is just around 2.2 million tonnes (excluding sugar stockpile). So, it can be said that there won't be a serious shortage of sugar this year.

In order to create a more accurate projection, the MARD asked the MoIT to look at the sugar inventory level in the distribution system, volume in the traders' circulation and estimated volume of sugar imports in the last months of the year and consider these factors as the basis for calculation, ensuring the balance of  domestic supply and demand as well as harmonizing benefits between sugar producers and sugarcane farmers.

Regarding to the time for carrying out an auction of the right to use tariff quota for the import of sugar, the MARD asked the MoIT to organize the auction in the third quarter of 2021 (Q3)

The auction in Q3 is intended to ensure that the supply will meets sugar demand in the peak season during summer and mid-autumn, avoiding shortages and high prices and basing on that  to ensure raw materials for domestic production, benefits for consumers and sugarcane farmers and at the same time ensure the commitment under WTO Agreement.