Casuco, a sugarcane company in Can Tho, Vietnam, has proposed to temporarily halt operations at its Phung Hiep Sugar Factory in Ngã Bảy, Hậu Giang due to a lack of raw materials. This decision was made based on the report on the investment in raw materials and the production plan for the 2024-2025 season, which revealed a significant discrepancy between the planned and actual area of sugarcane cultivation.
Phung Hiep Sugar Factory in Hau Giang temporarily ceases operations. Photo: CK.
According to the report, the planned area for sugarcane cultivation was approximately 700 hectares, but the actual area achieved was only over 245 hectares, equivalent to 35% of the planned area. This shortfall was attributed to farmers shifting from growing sugarcane to selling sugarcane juice, resulting in a dispersed planting schedule throughout the year instead of a concentrated peak season as in the past. Consequently, the investment policy for the 2024-2025 season, issued at the beginning of 2024, could not cover the entire area of new sugarcane cultivation in the raw material region.
Additionally, the low sugarcane yield posed challenges in mobilizing transportation to the factory, as it could not meet the minimum capacity of 2,300 – 2,500 tons of sugarcane per day. The company also had to incur additional costs for bringing boats from other provinces to transport sugarcane, coupled with waiting time for gathering the crop. Moreover, the factory’s production schedule overlapped with the rice harvest season, making it even more difficult to mobilize boats for a short period.
Previously, in October 2023, Casuco had to temporarily halt operations at the Phung Hiep Sugar Factory for the 2023-2024 season. Despite implementing an investment policy for the 2024-2025 season to restructure the raw material region and receiving support from local authorities and farmers, the company still fell short of its target for signed raw material contracts. Farmers prioritized selling sugarcane juice and supplying factories in Long An and Tay Ninh provinces, attracted by higher prices.
Casuco’s board of directors presented two scenarios to the company’s shareholders regarding the production plan for the 2024-2025 season. The first option involved maintaining the operations of the Phung Hiep Sugar Factory, with sugarcane prices matching the market rates (a minimum of 1,430-1,550 VND/kg) and a capacity of 2,300-2,500 tons of sugarcane per day. However, financial projections indicated that the factory would incur losses if this option were chosen.
Farmers in Hau Giang harvesting sugarcane. Photo: CK.
The second option, which was ultimately selected, entailed temporarily ceasing production at the Phung Hiep Sugar Factory for the 2024-2025 season. This decision resulted in a minimum loss of over 20.3 billion VND for the company. Casuco formulated a plan to consume more than 29,400 tons of contracted sugarcane, perform maintenance and repairs on the factory equipment for future operations, and incur costs estimated at over 5.3 billion VND.
In addition to the Phung Hiep Sugar Factory, the province of Hau Giang previously had two other sugar factories, which have been closed for many years. Sugarcane used to be a significant crop in the region, with a peak area of 15,000 hectares. However, in recent years, it has been replaced by other crops in the local agricultural portfolio.
In the current sugarcane season, farmers in Hau Giang have cultivated over 3,200 hectares of sugarcane, mainly in Phung Hiep and Ngã Bảy, with approximately 1,000 hectares already harvested. The majority of the crop is sold for making beverages, fetching prices ranging from 1,200 to 1,500 VND per kg. According to calculations by the farmers, with a yield of about 100-110 tons per hectare, they can earn a profit of approximately 30-40 million VND per hectare after deducting expenses. The provincial agricultural sector intends to reorganize sugarcane production, replace low-efficiency sugarcane areas with other crops, and introduce high-yield and high-quality sugarcane varieties.
Shrinking sugarcane areas in Khanh Hoa province
The cultivation of sugarcane in Ninh Hoa town, Khanh Hoa province, has long been an integral part of the local agricultural economy. However, like many other areas, sugarcane farming here is facing challenges as farmers are gradually shifting to other crops, resulting in a shrinking sugarcane cultivation area.
