Myanmar sugar production to hit lowest level in seven years

Sugarcane production in Myanmar is expected to decline to its lowest levels in seven years in fiscal 2020-21 as a result of poor demand, said U Win Htay, vice chair of the Myanmar Sugar and Sugarcane Product Entrepreneur Association

“Demand for sugar is too low now and traders are rushing to sell what’s left in the warehouses at fire sale prices to avoid getting caught in the glut,” he said.

Myanmar exports raw, unrefined sugar, which is produced from sugarcane, to China. However, China has raised import duties on Myanmar sugar to 85 percent and cracked down on illegal traders by blocking off their usual trade routes since 2017, leading to the current oversupply.

Myanmar must also apply for permission to export fixed quantities of sugar to China and adhere to procedures in accordance with rules set by the General Administration of Customs of the People’s Republic of China, such as obtaining AQSIQ certificates, which affirms that traders have followed specified requirements.

As a result, sugar exports have dwindled over the past two years and recently ground to a halt. Going forward, insiders expect farmers to gradually reduce growing sugarcane, leading to a shrinking of sugarcane plantations in fiscal 2020-21 to just over 350,000 acres. That’s a decline of more than 20 percent compared to seven years ago, and a record low for the industry, according to the association.

The other reason for the decline is a lack of global demand for unrefined sugar, which Myanmar produces. Among the 29 factories in the country which produces sugar, only two factories owned by Myanmar Economic Corporation and a Thai business, produce refined sugar, respectively.

Other than China, few countries import unrefined sugar from Myanmar. As such, most of the sugar being produced now is being used for domestic consumption. 

 “As the plantation area is reduced, factories will gradually shut down and if this continues, we might have to import sugar for consumption instead as sugarcane farmers will not plant if it is not profitable,” U Win Htay said.

To revive the local sugar market, Myanmar should invest in upgrading local factories and getting access to higher quality sugarcane seeds. Currently, local food and beverage businesses are permitted to import refined sugar for their needs and the coutnry imports some 10,000 tonnes of refined sugar from Thailand alone. 

But these policies can, and should change. “If the demand is for refined sugar, the government should set new policies to upgrade at least two local factories to enable them to process refined sugar. If local businesses require refined sugar, they can contract with these factories for supply. This will help the local sugar industry to add value and reduce reliance on imports,” U Win Htay said.