Directive No. 27/1999/CT-TTg on certain measures to promote the sugarcane and sugar program

DIRECTIVE

On certain measures to accelerate the implementation of the sugar cane program 

After more than four years of implementing the sugar cane program, the sugar industry nationwide has achieved some initial results: building and expanding 44 factories, investing in developing several sugar cane raw material areas with high-yield and quality varieties. To date, 41 factories have completed construction and commenced production, creating additional job opportunities and contributing to poverty reduction in many rural areas of the country.

However, sugar cane production is facing difficulties in product sales, high production costs, and many factories are at risk of not being able to repay foreign loans for imported equipment on credit terms and domestic loans for construction investment. The main reasons are the lack of raw materials leading to factories operating below capacity; high purchase prices and transportation fees for sugar cane to factories in many places; failure to fully utilize the potential for comprehensive business operations of post-sugar products, etc. To quickly overcome these difficulties, the Prime Minister instructs provincial people's committees and relevant ministries and sectors to organize the implementation of the following contents effectively:

1. Regarding raw material development:

The Ministry of Agriculture and Rural Development and provincial people's committees shall direct the review of sugar cane raw material area planning for factories, with specific plans and measures to develop raw material areas as follows:

Must plant the planned area of sugar cane according to the approved raw material area investment decision; the sugar cane raw material area must be concentrated, with short transport distance to the factory; apply new scientific and technological advances and intensive cultivation techniques with high-yield and quality varieties; where conditions permit, irrigation measures should be applied for sugar cane.

2. Regarding investment capital and credit:

The investment capital for constructing sugar factories is quite large, sourced from: foreign loans for imported equipment on credit terms, foreign credit from sources such as the Asian Development Bank (ADB), Official Development Assistance (ODA), state investment credit plan, some factories that have started operations are now due for repayment. The Ministry of Agriculture and Rural Development and provincial people's committees must take responsibility for directing factories under their management to formulate debt repayment measures, prioritizing repayment of foreign loans for imported equipment on credit terms. Based on developing raw material areas to maximize design capacity, maintaining reasonable raw material purchase prices, comprehensive business operations, rapidly reducing product costs, achieving profitability, and generating revenue to repay debts.

The Prime Minister has issued Decision No.: 194/1999/QĐ-TTg dated September 23, 1999 regarding financial handling for some sugar factories facing difficulties to create conditions for factories to develop production, reduce product costs, sell products, and have the ability to repay debts and operate effectively. For the remaining factories under the sugar cane program, separate policies and regulations will be established.

Currently, due to high production costs, sugar produced is accumulating, sales are slow, and it cannot be exported. Therefore, no new factories should be constructed, nor should existing ones be expanded. In areas where farmers are currently growing sugar cane to supply existing factories, additional planting areas should not be expanded, and some sugar cane planting areas may need to shift to other crops. Local people's committees should assist residents in selecting suitable crop structures to ensure income for farmers.

Based on approved raw material area projects, in addition to state investment credit plan loans for planting sugar cane, provincial people's committees should integrate programs within their jurisdictions to provide additional funding support for sugar cane growers.

3. Regarding infrastructure development:

For transportation roads serving sugar cane transportation, localities use state budget funds to construct main roads outside the factory area. For internal transportation roads within the raw material area, they are built using funds raised from the public and factory sponsorships.

For regions with conditions for irrigation to grow irrigated sugar cane, based on approved projects, the state budget invests in major irrigation works such as reservoirs and main canals, while sugar cane growers and factories must contribute funds for small-scale and internal irrigation works.

Sugar factories, in addition to using the 10% of sugarcane price included in the cost price to invest in developing raw material areas, can also use it to invest in irrigation and transportation works serving the raw material areas of the factory.

4. Regarding product sales:

The Ministry of Agriculture and Rural Development and provincial people's committees shall direct sugar factories under their jurisdiction to take full responsibility for finding ways to sell all produced sugar that is currently stockpiled, such as strengthening promotional activities, lowering selling prices; creating conditions for the early formation of a sugar association to coordinate with sugar factories to regulate domestic and export sugar prices (if applicable) to ensure product sales without losses.

Factories must stop the practice of competing to buy raw sugar cane, driving up cane prices excessively, making sugar prices too high and difficult to sell, and instead avoiding forced purchases and low prices for sugar cane, which harm sugar cane growers. Starting from the 1999-2000 sugar cane season, the purchase price for sugar cane must be publicly announced at the beginning of the season, ensuring that sugar cane growers earn higher income per unit area compared to other crops and having a reasonable structure in the sugar cost price.

Review production costs, minimize indirect management costs; promptly establish plans for developing industries adjacent to sugar, post-sugar industries, implement comprehensive business operations, utilizing by-products to produce bio-fertilizers, plywood, animal feed, alcohol, electricity, etc., contributing to increasing revenue, reducing sugar production costs, thereby lowering selling prices, enhancing sugar sales capabilities, and gradually improving Vietnam's competitive position in the sugar market.

The State encourages enterprises, primarily sugar factories, to develop the production of products using sugar, thereby increasing the consumption of sugar through these products.

The Central Steering Committee for Combating Smuggling and Commercial Fraud (Central Directive 853), the Chairmen of provincial and centrally-administered city People's Committees shall have specific plans and measures to prevent the smuggling of sugar across borders and at border gates in accordance with the spirit of Directive No. 853/1997/CT-TTg dated October 11, 1997 of the Prime Minister on combating smuggling in the new situation.

Enterprises themselves, the Ministry of Agriculture and Rural Development, and the Ministry of Trade are responsible for seeking markets so that when necessary, they can organize effective exports.

5. On shareholding reform:

Implementing shareholding reform in sugar factories, aiming to mobilize additional investment capital, linking the responsibilities between the factory and sugarcane growers, between the factory and workers, and between the factory and private sugar mills. In the short term, select operating factories with efficiency as pilot projects for shareholding reform involving participation from factory workers, sugarcane farmers, and private sugar mills in the region, to draw lessons for expansion.

The Ministers, Heads of ministerial-level agencies, Heads of government agencies, and Chairmen of provincial People's Committees where there are sugar factories are responsible for disseminating and implementing this Directive to each sugar factory and sugarcane growers for implementation.