Conducting pilot auction of sugar import tariff quotas in 2021

Concerning the type and quantity of sugar (raw sugar, refined sugar) included in the total amount of import tariff quotas in 2021, the Ministry of Agriculture and Rural Development proposed that the Ministry of Industry and Trade continue to conduct a pilot auction of the right to use tariff quotas in the same manner as in previous years, with raw sugar accounting for 70% and refined sugar accounting for 30%.

MARD reached an agreement on the draft Regulation establishing a pilot auction of sugar import tariff limits in 2021. It urged the MoIT and the Auction Council to conduct piloting on tariff quotations for imported sugar in order to determine the beginning price and step that are appropriate for the local and international markets at the time the auction is announced. To guarantee information transparency, the notification must be made public.

According to the draft, subjects eligible to participate in the 2021 sugar import tariff quota pilot auction include traders who use sugar directly in their manufacturing processes and traders who use raw sugar in the manufacture of refined sugar. MARD also reached an agreement with the MoIT on the topics for this pilot auction.

The Department of Agricultural Products Processing and Market Development (MARD) projected that yearly consumption requirements may vary between 2.1 and 2.3 million tons, with a change of approximately 5%. According to market mechanisms, the quantity of sugar that may be imported officially is about 1.5 million tons per year, or an average of 125,000 tons per month.

Between January and June of this year, imported sugar totaled 781.334 tons, while domestic sugar production reached more than 55% of factory capacity for the 2020-2021 crop year, with a total sugarcane output of 6,739,417 tons. 938,766 tons of refined sugar were produced, 689,830 tons from local sugarcane, and 211,400 tons from imported raw sugar.

By the end of July, refined sugar prices had increased by VND 500-800 per kg over the previous three months and by VND 2,000-2,200 per kg since the beginning of the year. The rise in sugar prices benefited local sugar producers and increased the purchasing price of raw sugar by 12-15 percent over the previous crop year.

However, the price of Vietnamese sugar remains lower than that of ASEAN nations and China at the moment. The fact that local governments are enforcing social segregation in order to prevent and control the Covid-19 pandemic has reduced sugar consumption capacity. Additionally, it resulted in increased circulation congestion and shipping costs. The increased demand for raw materials used in manufacturing during the Mid-Autumn Festival may contribute to the rise in the price of sugar.

According to the Department, the supply and demand for sugar in 2021 will be determined by the capacity to combat the disease, including the quantity of sugar generated from local cane in stock. No serious sugar shortage is expected.