In the long term, the EU market will provide a great opportunity for businesses with a variety of sugar, meeti...
In the long term, the EU market will provide a great opportunity for businesses with a variety of sugar, meeting high quality standards.
The 2019-2020 crop year is a difficult year for the sugar industry in Vietnam. According to the VSSA, nearly a third of sugar mills in Vietnam have to close in the 2019-2020 crop year.
On May, 5th, 2020, all 28 sugar mills ended the sugarcane pressing crop of the 2019-2020 crop with an accumulated output of 7.39 million tons of sugarcane, down 39.4% over the same period last year and 769,169 tons of all kinds of cane sugar were refined, down 34.3% from the same period last year, the lowest level in the last 19 years due to unfavorable weather conditions and competitive pressure with imported sugar and sweeteners. passwordIn the long term, the EU market will provide a great opportunity for businesses with a variety of sugar, meeting high quality standards.
The 2019-2020 crop year is a difficult year for the sugar industry in Vietnam. According to the VSSA, nearly a third of sugar mills in Vietnam have to close in the 2019-2020 crop year.
Many challenges ahead of the new crop
On May, 5th, 2020, all 28 sugar mills ended the sugarcane pressing crop of the 2019-2020 crop with an accumulated output of 7.39 million tons of sugarcane, down 39.4% over the same period last year and 769,169 tons of all kinds of cane sugar were refined, down 34.3% from the same period last year, the lowest level in the last 19 years due to unfavorable weather conditions and competitive pressure with imported sugar and sweeteners
However, thanks to the increase in domestic sugar prices in the 2019-2020 crop (up 13.6%), some listed sugar companies have achieved quite impressive growth in revenue and profit.
Among them, two companies that are able to maintain their competitiveness in the context of cheap imported sugar flooding into Vietnam are Son La Sugar Joint Stock Company (code SLS) and Thanh Thanh Cong - Bien Hoa Joint Stock Company (TTC Sugar) ( SBT code) with revenue growth of 22.1% and 26.2%, respectively.
However, in the 2020-2021 crop year, SLS has reduced its profit target with VND 816 billion in revenue, VND 26 billion in profit after tax; decreasing by 22% and 78% compared to the previous year.grew positively, but the profit margin was still very low compared to its peers.
In particular, the sugar industry expects the Ministry of Industry and Trade to apply safeguards in accordance with Vietnamese law and international practices to protect the domestic sugar production; take anti-dumping measures on liquid sugar, corn syrup and other sweeteners; to intensify the fight against sugar smuggling, especially in key areas; strengthen market management, combat trade fraud.
Seize the opportunities when in difficulties.
In the last months of 2020, domestic sugar consumption is expected to improve when the pandemic is under good control and food and beverage businesses begin to produce for major holidays. However, VSSA assessed that domestic sugar prices will show signs of decrease in the crop year 2020-2021 because sugar inventories remain high, and cheap imported sugar continues to penetrate the market, especially when Thailand is approved. is expected to restore production in crop year 2020-2021.
However, the research team of FPT Securities Joint Stock Company (FPTS) assessed that domestic enterprises have great opportunities for the Chinese market in the short term and the EU market in the long term.
The EVFTA Agreement stipulates that the export quota of 20,000 tons of assorted sugar and 400 tons of special sugar from Vietnam to the EU will be exempt from tax. The out-of-quota export tax is still charged at rates of 339 EUR / tonne for raw sugar and 419 EUR / ton on refined sugar.
In addition, due to the high sugar consumption per capita in the EU (35 kg/person/year, higher than the world average of 22.6 kg/person/year), the demand for sugar is This market is targeting high-end products such as organic sugar, diet sugar, fortified sugar ... These are products with high selling prices, profit margins from 35-40%.
In recent years, the Government, the Prime Minister, ministries, central and local agencies have always cared, directed, and created favorable conditions in accordance with the law and in accordance with international practice for the development of sugarcane segment.
In this Directive, the Prime Minister assigned the Ministry of Industry and Trade to preside over and coordinate with relevant agencies and units to actively monitor and promptly propose the application of trade remedies for imported sugar products. export in accordance with international commitments; forming a synchronous and accurate database on export, import and production on the basis of information provided by functional agencies, ready to assist businesses in consulting and preparing. Commercial defense records.
Cong thuong