Sugar is the essential demand in the daily life of people. In Vietnam, when the one - million ton sugar program (1994) has not be issued yet, the consumption level per capita was 8kg per year, the figure is 15kg per year at current time, it is expected to further increase (The Vietnam Economics Times). In addition to be used directly, sugar plays an important role in providing energy through processed and fermented foodstuff.

Supply, demand and the world sugar market

Sugar foodstuff is processed from two main materials, namely, sugarcane and beetroot. Sugar price in the world is dependent upon the situation of supply and demand in which the one of material of the top producing countries plays a decisive role.

Sugar supply source is increasing sharply in the large producing countries. According to International Sugar Organization (ISO), Brazilian sugar output in the 2006/2007 crop will reach 33.1 million ton increasing nearly 3% in comparison with last crop. It is predicted that Brazilian sugar output in the 2006-2007 period would reach the record level and the sugar output would continuously go up around 5-8%. This increasingly motivates Brazilian sugar exporters to promote the whole-sale activities. Brazil is the largest crude sugar exporting country in the world. It is estimated that Indian sugar output in the 2006-2007 crop would stand at 25.7 million ton, an increase of over 15% comparing to last crop. It is projected that Indian sugar export in the 2006-2007 period would reach around 1.5 - 1.7 million ton increasing sharply in comparison with 650,000 ton of last crop. In this context, investment funds, speculators would increase the volume of sold-out sugar resulting in the rapidly decreased sugar price.

Nevertheless, in the EU, the subsidizing for the beetroots production is decreasing considerably leading to the sharply decrease in beetroot area. For the 2005/2006 crop, the sugar output of EU was 20.45 million ton, for the 2006/2007 period, the sugar output was 16.6 million ton. The leading sugar producing countries such as Brazil, Australia, Columbia, the U.S, and Thailand own the programme on using clean energy like bio-ethanol for the production of sugarcane water (molasses). Ethanol production to supplement material will remarkably impact on the world supply-demand relation of sugar. Thus, although at present the consumption sugar price is on the decrease, it is forecasted that it would increase and keep at the high level in the future.

Supply, demand and domestic market

“By this time of the 2006 -2007 period, domestic sugar factories has produced over 900,000 ton sugar” according to Mr. Nguyen Thanh Long - General Derector of Can Tho sugar joint-stock company (Casuco) “It is the prediction of Vietnam Sugar Association that the volume of the produced sugar in this period satisfies domestic consumption demand, foodstuff processing and reserves.

At domestic market, the price of white sugar the plants had sold out at present kept at 6.500-7.100VND/kg, decreasing 2000-3000VND/kg compared to the same period of 2006. Vietnam sugar price decreases because of the impact of world sugar price. Mr. Long stated that: considering many factors, domestic sugar price would be impossible to recover in the coming time. The possibility is that the redundant white sugar in the world market would export into Vietnam.

Sugar closely linking to rural industrialization

Sugar development plan to 2010 and the orientation for 2020 were approved by the government on February 15th, 2007. The plan indicated that they need to synchronize all steps of sugar development from material production, processing plants, post-sugar production to the circulation and product consumption, attaching the benefit of processing plants to material producers. In order to meet these, The State would support a part to invest in developing transport and irrigation infrastructure for the concentrated areas, research the transfer of technique science and technology with the aim to promote productivity, quality, and the production efficiency of sugar industry.

The development indicators showed that up to 2010 the sugar output would reach at 1.5 million ton including industrial sugar 1.4 million ton (670,000 ton material sugar, the remainder was 730,000 ton white sugar). The total design productivity of factories would increase from 82,850 ton per day currently to 105,000 ton, but there is no new sugar factory will be built.

Up to 2010, the sugar planting area will keep 300,000ha, the productivity on the average will be 80 ton/ha, the output will be 24 million ton sugar. The total design productivity of sugar factories will increase to 120.000 ton sugar per day.

In line with the commitments in implementing regulations process of World Trade Organization (WTO). The State budget will support to import and multiply new sugarcane varieties, invest water reservoirs, clue irrigations and transport works in the concentrated material area.