Farmers warn of ‘sugar mountain’ amid falling Chinese demand

Reduced demand for sugar from China could lead to a drop in export prices and the creation of a sugar mountain, growers have warned.

As the Chinese sugar growing season opens, Myanmar’s sugar and cane related products association has urged the Ministry of Commerce to revisit its export policy.

Myanmar’s exporters may be about to come down from a sugar high fuelled by record high prices. China has been paying more than US$600 a tonne, the highest price since 2011, and 50 percent higher than the international price of $400, since April.

The Ministry of Commerce has enforced a scheme whereby traders who buy sugar from overseas must guarantee they will re-export it. If they fail, they are required to return the sugar to wherever they bought it from.

Sugar growers have been making so much profit that exporters who usually deal in rice and beans have taken up sugar trading, association chair U Soe Linn told an October 27 press conference.

Trading volumes have also surged, with Myanmar exporting 200,000 tonnes of sugar so far this year, about double what it exported in 2013-2014, with roughly half of this imported from Thailand and re-exported.

“China will start their sugar season soon, so we can’t predict Chinese demand over the next few months,” U Soe Linn told The Myanmar Times.

“If demand falls, the sugar we import from Thailand will pile up, bringing down the price. If prices fall below K1000 a viss [1 viss equals 1.6kg or 3.6lbs], it will be a problem for cane farmers, which is why we want the ministry to stop their support for re-exporting,” he said.

His association advises the ministries of commerce, agriculture and industry on taxation policy.

“We need a level playing field. We faced the same problem in the condensed milk industry. I was a director in a company that controlled 60pc of the market, but could not compete because of skewed tax policies,” he said.

“Myanmar sugar factories pay a total of 7pc tax, including 2pc income tax, whereas the re-exporters only pay 2.5pc tax,” said U Soe Linn, adding that tax should be set at 5pc across the board.

Source: Myanmar Times

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