Raw material zones create new momentum for sugarcane industry

Restructuring the raw material zones

After years of effort to recover, Viet Nam's sugarcane industry now stands at an important turning point. While the earlier goal was to preserve growing areas and restore production following a period of shrinking acreage, the current priority is to build sugarcane zones with higher yields, lower costs, and stronger resilience to climate change.

This shift is taking place against a backdrop of continued market pressure. According to the Viet Nam Sugarcane and Sugar Association, by the end of the 2025-2026 crushing season, the country had processed roughly 13.3 million tons of sugarcane, producing nearly 1.298 million tons of sugar. However, domestic sugar consumption continues to face difficulties amid large supply, low sugar prices, and ongoing pressure from imported and unofficial sugar of unclear origin.

At the same time, the restructuring process of recent years has also brought positive signs. By the 2024-2025 crop year, sugar output from sugarcane had risen for four consecutive seasons, roughly 180 percent higher than in the 2020-2021 season, while sugarcane purchase prices had increased for five consecutive seasons, about 150 percent higher than in the 2019-2020 season. Linkages between businesses and sugarcane growers have been increasingly strengthened, supporting the livelihoods of around 220,000 farming households. Notably, Viet Nam's sugar yield per hectare has now surpassed that of many other countries in Southeast Asia.

According to Dr. Cao Anh Duong, Director of the Sugarcane Research Institute, these results represent only a necessary starting point. The 2026-2031 period will be decisive in converting the advantages gained from trade-defense measures into genuine industry competitiveness. Achieving this will require reorganizing raw material zones in a comprehensive, coordinated manner.

He said restructuring raw material zones is not simply a matter of replacing varieties or investing in more machinery, but rather a process of reorganizing the entire production system, from varieties and cultivation practices to infrastructure, data, and linkages with processing plants. "Without good raw material zones, there can be no competitive sugar mills," he said, noting that cane yield, sugar content, raw material costs, and processing efficiency all originate in the field.

According to Dr. Duong, raw material zones still face numerous "bottlenecks." Production remains small-scale and fragmented, with scattered land holdings making synchronized mechanization difficult; plant varieties are not yet sufficiently uniform, and the supply of disease-free seed stock remains limited; labor, harvesting, and transport costs continue to rise; and data on growing areas, output forecasts, and harvest schedules is not yet linked to the needs of processing plants. Without addressing these bottlenecks in a coordinated way, it will be difficult to raise the competitiveness of the entire supply chain.

Increasing value per hectare of sugarcane

To address these bottlenecks, Duong said the restructuring of raw material zones should be based on five pillars: developing improved varieties and a disease-free seed system; low-emission cultivation; climate adaptation tailored to each ecological zone; data-driven management of raw material zones; and mechanization linked with agricultural services. What these solutions share is a common goal: producing more sugar on the same land area while reducing production costs and emissions.

Notably, digital transformation is seen as one of the key factors that will differentiate raw material zones in the coming period. When maps of growing areas, cultivation logs, output forecasts, and harvest schedules are digitized, businesses can proactively balance their raw material supply, reduce post-harvest losses, and optimize processing capacity. Traceability also becomes more transparent, meeting increasingly stringent market requirements.

Beyond providing a stable source of raw materials, well-managed sugarcane zones also expand opportunities to develop higher value-added products. As raw material quality improves, businesses are better positioned to make more effective use of bagasse, molasses, and other byproducts to produce biomass power, bioethanol, organic fertilizer, and other products. This is also a development trend seen in the sugarcane industries of many countries around the world, where the value of sugarcane is measured not only by the amount of sugar produced but also by the ability to generate multiple products from the same growing area.

According to Nguyen Van Loc, Chairman of the Viet Nam Sugarcane and Sugar Association, competitive pressure in recent years has been precisely what has forced the industry to innovate.

"Sugarcane and sugar is one of the industries facing the most challenges. That pressure has forced businesses and farmers to find a way to survive. As a result, the industry has actually been pursuing green and circular solutions for many years now," Loc said.

According to Loc, the ultimate goal of all this innovation remains to raise productivity and lower production costs. This is also why the industry has focused more heavily on developing new varieties, mechanization, and the application of technology rather than simply expanding the cultivation area. "That is the path suited to Viet Nam's conditions," Loc emphasized.

Regarding the circular economy, he said Viet Nam needs an approach suited to its actual conditions. Raw material zones remain fragmented, and the distance between fields and processing plants is often considerable, meaning that in many areas the cost of transporting byproducts exceeds the value recovered from them. Developing a circular model, therefore, is not just about using bagasse or molasses, but also about reorganizing raw material zones, reducing logistics costs, and strengthening the effectiveness of linkages between growers and businesses.

A June 2026 report from the International Sugar Organization (ISO) forecasts that the global sugar market will move toward a more balanced state in the 2026-2027 crop year, as output declines while demand continues to rise. Against this backdrop, businesses with well-invested raw material zones that apply science and technology will be able to generate greater value per hectare of land. In that context, raw material zones will no longer serve merely as sources of sugarcane for processing plants but will become the foundation for new momentum across Viet Nam's entire sugarcane and sugar industry.