The Cao Bang Sugarcane Company, formerly a state-owned enterprise, was privatized and renamed the Cao Bang Sugar Joint Stock Company in 2006. At the recent Vietnam Sugarcane Industry Conference for the 2023/24 crop year in Gia Lai, Mr. Nong Van Thuyet, Chairman of the Board of Directors of Cao Bang Sugar Joint Stock Company, shared that the company’s raw material area was planned by the Cao Bang People’s Committee with an area of 4,200 hectares. Most of this sugarcane cultivation area is located in the border area adjacent to China, with particularly challenging socio-economic conditions.
FARMERS OPT TO SELL TO MIDDLEMEN, BYPASSING THE COMPANY
In the sugarcane production chain, the Cao Bang Sugar Joint Stock Company invests in advance by providing agricultural materials (seeds, fertilizers, pesticides), training, and technology transfer to sugarcane farmers. At the same time, they sign contracts with each sugarcane farming household in the region, ensuring transparent and publicly disclosed purchase prices. The company aims to maximize benefits for sugarcane farmers, offering prices in line with the prevailing sugar prices for each period. They also organize the purchase and make full and timely payments to the farmers.
Mr. Quyet shared that the sugarcane production chain in Cao Bang province has created a livelihood for over 5,000 households and provided stable jobs for more than 300 workers involved in the production line. The company also contributes significantly to the state budget, with an annual contribution of over VND 15 billion, peaking at VND 24.7 billion in 2022. They have played a notable role in social welfare in the region, contributing to economic development and maintaining security and order in the border area.
“Farmers’ autonomous decision to sell sugarcane to middlemen not only causes capital loss for the company due to our prior investments in the raw material area but also affects our crushing capacity throughout the operational process.”
Mr. Nong Van Thuyet, Chairman of the Board of Directors of Cao Bang Sugar Joint Stock Company.
However, the Cao Bang Sugar Joint Stock Company is now facing the risk of dissolution due to a shortage of raw materials for its production line. Mr. Thuyet pointed out the reality of the situation: “Middlemen, who have not invested in the region, are buying sugarcane from our invested raw material area for export to China (a country with protective policies for the sugarcane industry, resulting in higher sugar and sugarcane prices than in Vietnam).”
Looking back at the 2023/24 sugarcane crop year, Mr. Thuyet shared that the total sugarcane cultivation area in Cao Bang province was 2,450 hectares, concentrated in three districts: Quang Hoa, Trung Khanh, and Thach An. Among these, Quang Hoa accounted for over 96% of the area.
Explaining the discrepancy between the planned sugarcane cultivation area of 4,200 hectares and the actual area of less than 2,500 hectares, Mr. Thuyet attributed it to farmers switching to other crops over the past decade.
Currently, there are 3,959 households cultivating sugarcane under contracts with the Cao Bang Sugar Joint Stock Company. In the 2023/24 crop year, the company continued to implement investment and encouragement policies for sugarcane farming households. These policies included providing interest-free loans for high-quality sugarcane seeds, fertilizers, and pesticides, as well as offering subsidized prices for sugarcane seeds for new planting households, with a total investment of over VND 13.4 billion.
In the harvesting and purchasing phase, the company develops plans, arranges, and allocates the number of cuttings for specific areas, ensuring timely transportation of sugarcane raw materials to meet the production line’s requirements. The company also publicly displays the purchase prices for sugarcane raw materials and sugarcane seeds, with an increase of more than 80 VND/kg for each type, and sends this information to the People’s Committees of the communes, towns, and sugarcane farming households. Specifically, the purchase prices in the fields are as follows: Type A – 1,300 VND/kg, Type B – 1,230 VND/kg, and Type C – 1,150 VND/kg. The purchase prices at the company are: Type A – 1,390 VND/kg, Type B – 1,320 VND/kg, and Type C – 1,240 VND/kg.
However, during the crop year, upon inspecting the actual situation, the company discovered that a significant amount of sugarcane from their raw material area was being purchased by some middlemen and exported to China.
“To support sugarcane farmers, the company invests 3-4 million VND per household annually, providing seeds, fertilizers, pesticides, and internal road sugar for the communes in the raw material area. However, during the harvest season, middlemen offer purchase prices that are only 10-20 VND/kg higher than the company’s prices, leading to many farmers in the raw material area not fulfilling their contractual commitments and selling their produce to these middlemen,” said Mr. Thuyet.
PROTECTING THE SUGARCANE PRODUCTION CHAIN
According to a survey conducted by the People’s Committee of Quang Hoa district, during the main harvest season, the average daily export volume of sugarcane to China was between 400 and 500 tons. In Quang Hoa district, several companies and cooperatives blatantly and openly set up signs and locations for sugarcane purchase, even buying sugarcane from farmers very close to the factory.
A notable example is the Son Ha Agricultural Machinery and Services One-Member Limited Company, which set up a weighing station and bought sugarcane in Hung Long ward, Ta Lung town. Similarly, the Phuc Hoa Agricultural and Forestry Cooperative organized various vehicles, such as tractors and truck tractors, to transport sugarcane in Ward 1, Hoa Thuan town. In the villages of Ban Tin – Lung Tao and Lung Luong in Hanh Phuc commune, some residents cut sugarcane and transported it to the weighing stations of other middlemen and enterprises.
“In the 2023/2024 crushing season, the volume of sugarcane exported by middlemen through official channels to China reached 30,000 tons, accounting for over 20% of the region’s total sugarcane raw material volume. Due to the middlemen’s competition for raw materials for export to China, the Cao Bang Sugar Company faced a severe shortage of raw materials, operating its production line at only 1,600 tons of sugarcane per day,” shared Mr. Thuyet.
“The situation is expected to worsen in the 2024/2025 crop year, as middlemen are setting up purchasing stations across the key areas of our raw material region.”
Mr. Nong Van Thuyet, Chairman of the Board of Directors of Cao Bang Sugar Joint Stock Company.
To address the issue of unfair competition in sugarcane raw material purchasing, the Cao Bang Sugar Joint Stock Company has sent documents to relevant authorities and People’s Committees of communes and towns in Quang Hoa district, requesting support to prevent middlemen from competing for sugarcane purchases.
The People’s Committee of Quang Hoa district has also issued a document directing the People’s Committees of communes and towns and functional units to coordinate and prevent middlemen from competing for sugarcane purchases in the company’s raw material area.
Additionally, the district People’s Committee has instructed the People’s Committees of communes and towns to strengthen propaganda and encourage sugarcane farming households to comply with the signed contracts with the company and refrain from selling sugarcane raw materials to other individuals, units, or middlemen.
However, due to the lack of determination and enforcement by the local authorities, the situation has not improved, and the actions have remained at the level of propaganda and advocacy.
The actions of middlemen, who have not invested or been allocated cultivation areas, in competing for purchases for export, seriously harm investors’ interests, create an unfair competitive environment, cause chaos in the region, disrupt the production chain, and go against the spirit of the government’s Decree 98/ND-CP dated July 5, 2018, on “Policies to encourage the development of cooperation and linkages in the production and consumption of agricultural products.” It also contradicts Directive No. 28/CT-TTg dated July 14, 2020, of the Prime Minister on “Deploying solutions for the development of Vietnam’s sugarcane industry in the new situation.”
Therefore, the Cao Bang Sugar Joint Stock Company proposes that the Ministry of Agriculture and Rural Development, relevant ministries and branches, and the Vietnam Sugarcane Association issue documents and direct local authorities to implement measures to protect the sugarcane production chain in Cao Bang province, based on current regulations.
