The Elusive Smuggling Conundrum: Why Aren’t Businesses Taking Action?

At the Conference on Summing up Sugarcane Production for the 2024/2025 crop organized by the Vietnam Sugarcane Association (VSSA), Mr. Nguyen Van Loc, Chairman of VSSA, shared that the sugarcane industry is facing formidable challenges, especially with the influx of smuggled, cheap, and unidentified sugar in the market, which has caused a severe imbalance, leading to record-high inventory levels in the country.

Mr. Loc asserted, “Sugar smuggling is causing significant damage to the domestic sugarcane industry, with an estimated volume of 500,000-600,000 tons per year. This has resulted in high inventory levels (over 60% of the 2024/25 crop production as of July), depressed domestic sugar prices, and adverse effects on millions of sugarcane farmers.”

He warned, “If we fail to control smuggling, domestic enterprises will find it increasingly difficult to survive and maintain their foothold in the domestic market.”

In response to this situation, VSSA has proposed to the Government and relevant ministries and sectors to strengthen solutions to combat smuggling and trade fraud and create mechanisms for the sustainable development of the sugarcane industry, ensuring food security and a healthy competitive environment for international integration.

Mr. Ngo Hong Phong, Director of the Department of Quality, Processing and Market Development, Ministry of Agriculture and Environment (M.A.E), acknowledged that while formal sugar imports can be controlled, the issue of sugar smuggling through unofficial channels, as raised by VSSA, is complex and requires further investigation and clarification. In addition to tightening controls on smuggling, the M.A.E will work closely with VSSA and enterprises to thoroughly evaluate and accurately assess the impact of this issue. They will also explore multiple measures to develop the industry.

“However, enterprises need to take the initiative in saving themselves and not solely rely on mechanisms. Currently, our production costs are higher than those in the region, so it is necessary to review the entire process and cut costs to improve competitiveness. Investing in developing value-added products from sugarcane is essential,” emphasized Mr. Phong.

Dr. Cao Anh Duong, Vice Chairman of VSSA and Director of the Vietnam Sugarcane Research Institute, reported that in 2024, the sugarcane cultivation area in the country exceeded 185,000 hectares, an increase of more than 10,000 hectares compared to the previous year. The average yield reached 68.3 tons/hectare, slightly higher than the 67.7 tons/hectare in 2023, bringing the total sugarcane output to 12.67 million tons, an increase of 7%.

The purchase price of sugarcane in the last crop ranged from 1.2 to 1.3 million VND/ton, a significant improvement from the previous level of less than 824,000 VND/ton in the 2019/2020 season. As a result, farmers made profits, and the sugarcane growing area expanded, motivating farmers to continue cultivating sugarcane.

Notably, Vietnam’s average sugar yield in the 2024/2025 crop reached 6.69 tons/hectare, ranking first in ASEAN, surpassing Thailand (5.20 tons/hectare), Indonesia (4.76 tons/hectare), and the Philippines (4.62 tons/hectare). This achievement demonstrates the remarkable recovery and breakthrough of the sugarcane industry after a challenging period.

However, ironically, Vietnam’s sugar prices remain lower than those of regional countries, standing at only 66% of the Philippines’, 70% of Indonesia’s, and 94% of China’s. This indicates that while yield has increased, the industry still faces significant challenges in terms of value and competitiveness.