The risk of sugar price inflation due to hoarding and price manipulation

According to Mr. Nguyen Van Loc, Chairman of the Vietnam Sugarcane and Sugar Association (VSSA), in recent times, sugar prices in the market have shown unusual fluctuations. Market developments indicate the emergence of signs of hoarding and price increases by certain entities, potentially pushing sugar prices beyond a reasonable and balanced level for consumers if this trend continues.

Recently, the food industry has submitted a recommendation to expand the import quota for sugar by a minimum of 600,000 tons, as domestic sugar production plants are unable to meet the demand of businesses.

Given this situation, the Vietnam Sugarcane and Sugar Association has reported to the Ministry of Agriculture and Rural Development (MARD) regarding the supply-demand situation of sugar in 2023 and the forecast for 2024. They have also participated in proposing solutions for managing the import of sugar within the customs quota for 2023 to ensure a stable supply for the domestic market and to balance the interests of sugarcane growers, sugar production businesses, sugar-consuming enterprises, and consumers.

The report states that during the 2022 – 2023 season, the Vietnamese sugar industry has pursued dual objectives of raising sugarcane purchasing prices to a level equivalent to regional countries, while maintaining sugar prices at a level comparable to or lower than neighboring sugar-producing nations, including the Philippines, Indonesia, and China. VSSA believes that the current sugar cane price is reasonable and ensures the goal of balancing the interests of all related parties.

The Vietnam Sugarcane and Sugar Association contends that the current sugarcane price structure reflects a balance that serves the interests of various stakeholders involved in the sugar industry. This equilibrium seeks to ensure that sugarcane growers receive adequate compensation for their labor and resources, while also safeguarding the affordability of sugar for consumers.

The approach undertaken by the industry underscores its commitment to nurturing a harmonious relationship between all parties along the sugar supply chain. It recognizes the symbiotic relationship between sugarcane growers, sugar producers, and consumers, emphasizing the need to strike a fair equilibrium that sustains the growth and vitality of the industry as a whole.

The report has participated in proposing solutions for managing the import of sugar within the customs quota for 2023, ensuring compliance with the regulations of foreign trade management, competition management, bidding, and international commitments. These measures aim to ensure a supply source for the domestic market and to harmonize the interests of sugarcane growers, sugar production businesses, sugar-consuming enterprises, and consumers. Specifically:

The import quota for sugar in 2023 is set at a minimum according to WTO commitments, which is 119,000 tons. The auction for the import quota of 119,000 tons is scheduled for September 2023.

There are no regulations on the ratio of raw sugar and refined sugar imports within the customs quota for 2023. Additionally, the scope of auction participants is expanded to include traders directly using sugar as raw material, sugar production traders, and commercial sugar traders.

The VSSA recommends that the Ministry of Industry and Trade adjust the bidding regulations for the customs quota to prevent collusion that renders the auction process ineffective and ensures auction results that comply with the requirements of the Law on Competition and the Law on Bidding.

After the auction of the import quota of 119,000 tons, if there are signs of rising sugar prices due to supply shortages or manipulative hoarding practices, causing sugar prices to exceed a level that is balanced and beneficial for sugarcane growers, sugar production businesses, sugar-consuming enterprises, and consumers, VSSA commits to promptly reporting to MARD and relevant state management agencies to propose an increase in the import quota for 2023 before the 2023 – 2024 season begins.

Currently, the Vietnamese sugar industry is preparing for the 2023 – 2024 sugarcane harvesting season, and a stable sugar market is crucial to ensure the market outlet for the sugar production chain. The Executive Board of the Vietnam Sugarcane and Sugar Association advises its members in sugar production to stabilize the market by supplying sugar according to demand and maintaining the current reasonable sugar price to balance the interests of all related parties. They emphasize not allowing further price increases and protecting their own and consumers' rights based on balanced interests

For cases that do not comply with the aforementioned recommendations, the Vietnam Sugarcane and Sugar Association will be obliged to implement countermeasures, including the act of promptly reporting to the Ministry of Agriculture and Rural Development and relevant state management agencies to propose the addition of the import quota for 2023.