In the countries with developed sugar industries, sugar by-products can bring in higher than expected values and help ease sugar production costs. This however does not happen in a country like Vietnam even if its sugar industry has been developing for 20 years. Its by-products’ values are still less than 10 percent of what they’re supposed to be.
In 2004, the Lam Son Sugar Company (LSS) invested 10 million dollars to build a plant that produces alcohol from treacle and bagasse. With a sugar cane pressing capacity of 85,000 tons, the company’s plant can churn out 20 million liters of alcohol each year, bringing in hundreds of billions of dong to help offset the production costs of LSS.
Le Van Tam, Chair of LSS said that in the 2010-2011 crop season, the turnover from alcohol production reached 300 billion dong, or 9.6 percent of the total turnover.
However, Tam admitted that the turnover from the plant remains too modest, and does not correspond to the heavy investment. While the company earned 300 billion dong from alcohol production, it had to reinvest 100 billion dong to help treat the environment.
Besides LSS, the Quang Ngai, Hiep Hoa and Tuy Hoa sugar refineries have also invested hundreds of billions of dong in alcohol making technology. However, like LSS, turnover from sugar by-products are not high enough to cover expenses. As a result, Quang Ngai and Hiep Hoa have stopped production or kept the plants’ operations at moderate levels.
Nguyen Thanh Long, Chair of the Sugar Cane and Sugar Association and manager of the Can Tho Refinery, admitted that this is the weakest point of the Vietnamese sugar industry.
According to Long, the byproducts collected from the sugar refinery can have values higher than those of the main product – sugar. For example, bagasse can be used as fuel to create electricity or make pulp and boards used in construction. Meanwhile, treacle can be used to make alcohol and ethanol, while some other by-products can be used as fertilizer to improve the land for growing sugar cane.
However, experts say, for many different reasons, sugar refineries can only maximize 10 percent of the by-products.
The sugar industry needs to be converted to the recycled energy sector
According to Long, in other countries with developed sugar industries like Brazil, sugar production is considered part of the energy industry, not as part of the food industry as it is in Vietnam. Therefore, the government applies appropriate policies, with incentives given to enterprises to encourage them to maximize the values of their by-products.
Tam said that using bio fuels (made of alcohol) is not yet as important in Vietnam. This explains why 20 million liters of alcohol collected every year hardly gets sold. This is the reason why it would be unprofitable for enterprises to spend hundreds of billions of dong to invest in plants such as LSS.
In general, a power plant that generates electricity from bagasse costs $1,000 to $2,000 USD for every kw of installation, depending on the technology used. For example, a sugar refinery with the capacity of 3,000 tons a day can have a 30MW electricity plant with the investment capital of $30-60 million dollars.
Sugar companies cannot sell electricity at reasonably high prices. Nguyen Van Loc, General Director of the Bien Hoa Sugar Company said in other countries, the energy made of bagasse is considered a kind of renewable energy and can be sold at a premium rate. The Electricity of Vietnam (EVN), the only wholesale electricity buyer of sugar companies, pays only 4.4 cents per kwh. Meanwhile, EVN buys electricity from China at 7 cents per kwh. This does not encourage sugar companies to invest heavily on upgrading their equipment.
“In their long-term plans to develop other power generation sources from 2006-2015, EVN does not mention renewable energy from sugar plants,” Loc added.
