Guangxi government released, at the end of Dec. 2015, the Proposal of Guangxi Zhuang Autonomous Region to Promote the Sugar Industry to Start 2nd Business Start-up, which aims to achieve the transformation and upgrading of the sugar industry, according to CCM.
The Guangxi Sugar Industry Development Bureau held on 30 Dec., 2015 a press conference in Nanning City, Guangxi Zhuang Autonomous Region, to release the Proposal of Guangxi Zhuang Autonomous Region to Promote the Sugar Industry to Start 2nd Business Start-up. Guangxi is planning to invest, within 5 years (2016-2020), a total of USD7.23 billion (RMB47 billion) to construct 103 projects in order to cover 3 segments in particular: the segment of planting, the segment of processing and exploiting of the sugarcane, and the segment of marketing and service, all this in order to finally achieve the transformation and upgrading of sugar industry.
Specifically, the region aims to:
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Complete the construction of a 333,333 ha (5 million mu) high-output and high-sugar-content sugarcane planting base (dual-high sugarcane planting base) with the simple purpose of drastically narrowing down the gap in sugarcane production cost present between the region and the large foreign sugar-exporting countries
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Bring significant results to the development of sugarcane diversification industry – have the demand for sugarcane from non-sugar industries to reach 10 million tonnes+ annually and, in addition, having said output value to hit over USD1.54 billion (RMB10 billion) – having rum, biochemical, sugarcane juice, etc., becoming new economic growth points
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Further consolidate the position of Guangxi sugar website (GSMN.COM, B2B platform for sugar industry), the largest sugar wholesale market in China – have the online trade volume of spot sugar increasing to 35%+ of the total percentage (online and offline)
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Build up a big data platform, for sugar industry primarily, to collect information related to sugar industry, information such as climate conditions, prices and machinery available to serve this industry
According to CCM's research, the first business start-up in Guangxi occurred in the 1990s and early 21st century, mainly with the purpose of reorganising state-owned enterprises. After such reform, Guangxi had owned many large-scale private sugar enterprises which controlled nearly 70% of the sugar plants existing in the region.
Qiu Dong, vice-director of Guangxi’s Department of Industry and Information Technology and director of the Guangxi Development Bureau of Sugar Industry, once said the following: “In recent years, Guangxi, as well as the whole country, has been facing several unbeknownst challenges involving the sugar industry – challenges such as the steady decline of the prices of sugar and the losses that sugar makers have been forced to suffer. Guangxi accounts for more than 60% of the national sugar production and this consequently means that its business is the first to be affected”.
During the extracting seasons from 2010/11 to 2013/14 (all starting from Oct. to Sept. of the following year), Guangxi witnessed constant falls in sugar prices, from USD1,199/t (RMB7,800/t) to USD592/t (RMB3,850/t). During 2013/14 in particular, the loss coverage of 103 sugar plants had reached 86% (= about 88 plants were at a loss), up by 8 percentage points YoY.
The main cause of the fall of sugar prices and industry loss turned out to ultimately be oversupply. According to CCM's research, the peak profit from processing imported sugar was about USD246/t (RMB1,600/t) during year 2011-2014. The domestic enterprises, driven by profit, imported large quantities of raw sugar and established many raw sugar processing lines. All this certainly increased quickly the domestic raw sugar processing capacity, from nearly 3 million t/a in 2010, to over 6 million t/a in 2011 and further to > 7 million t/a in 2014, but it also ended up causing oversupply. According to the data provided by the China Sugar Association, the state had only 317,000 tonnes of sugar in store during 2010/11, amount that has however drastically risen to 1.91 million tonnes by 2013/14.
It's been ascertained that a total of 30 sugar enterprises is present in Guangxi and that out of all of them, the top 8 enterprises (by daily extracting capacity) in specific are combined to have an extracting capacity of 485,000 t/a, that would amount to about 70% of the total. These data indicate that a further improving of industry concentration is needed. Simultaneously, there are over 45 sugar plants with <5,000 t/d, that is over 40% of the total. In addition, the sugarcane supply chain is mainly revolving around sugar making, together with paper making based on bagasse and alcohol production based on molasses. This consists in a short supply chain with the lack of high added-value downstream products.
Under these circumstances, when the imported sugar enters the domestic market, some enterprises and plants incapable of controlling risks are sure to suffer losses and, in the worst cases, even bankruptcy.
It has been noted that all the links composing the Guangxi’s sugarcane supply chain, such as farmers, co-operatives, sugar enterprises and sugar distributors, are disconnected. This fact leads to problematic consequences such as the aimless planting/ production expansion, planting of backward sugarcane varieties, low technology, etc.
Top 8 sugar enterprises (by daily extracting capacity) in Guangxi, Oct. 2015-Sept. 2016
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No.
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Enterprise
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Extracting capacity, t/d
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Number of sugar plants
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1
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Guangxi Yangpu Nanhua Sugar Group Co., Ltd.
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90,700
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15
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2
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Guangxi Nanning East Asia Sugar Co., Ltd.
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83,500
|
7
|
|
3
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Guangxi State Farms Sugar Industrial Group Co., Ltd.
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62,500
|
10
|
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4
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Guangxi Yongxin Huatang Group Co., Ltd.
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59,500
|
5
|
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5
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Nanning Sugar Industry Co., Ltd.
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50,000
|
6
|
|
6
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Guangxi Liuzhou Fengshan Sugar Group Co., Ltd.
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49,500
|
10
|
|
7
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Associated British Sugar Holdings (China) Co., Ltd.
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39,500
|
5
|
|
8
|
Guangxi Laibin Dongtang Group Co., Ltd.
|
39,000
|
4
|
Source: CCM
The formulation of the 2nd business start-up proposal undoubtedly represents a safe guideline to the regional sugar industry’s future development which is recently facing so many problems. The achievements that have been accomplished up to 2015 will also have the industry grow confident enough to achieve the goal within 5 years.
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Supply chain: it now consists of biochemical enterprises like Guangxi Guangwei Chemical Co., Ltd., which use molasses to produce polyvinyl alcohol (total capacity: 50,000 t/a), sugarcane juice enterprises such as Beihai BPG Juice Co., Ltd., and enterprises represented by Guangxi State Farms Sugar Industrial Group Co., Ltd. that utilise molasses to produce rum
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Production scale: Nanning Sugar Industry Co., Ltd. has successively acquired both Huanjiang Sugar Plant and Daqiao Sugar Plant in year 2015, and as a result its extracting capacity is now up by 43% to 50,000 t/d
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Sugar industry service platform: the online Guangxi Sugar Service Network, established by Guangxi's Department of Industry and Information Technology and Sugar Industry Development Bureau was officially applied on 18 Dec. in the field of sugar related agriculture (= sugarcane planting and extracting) to provide services for farmers and co-operatives. Such service network will without a doubt step further into the field of sugar making and sugar circulation for profit-seeking
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Tag: sugar