Vietnam will have a sugar surplus for the first ever time this year, and is looking at ways to export the commodity.

Sugar output is expected to reach a record 1.43 million tonnes in the 2011-12 crop, 280,000 tonnes higher than last year, Do Thanh Liem, deputy chairman of the Vietnam Sugar and Sugarcane Association, told a recent conference.

This amount, in addition to more than 100,000 tonnes stockpiled at sugar mills and 70,000 tonnes imported under Vietnam 's World Trade Organisation commitments, would lead to excess supply of 300,000 tonnes, he said.

It does not include sugar that is smuggled in, the association said, adding the volume of contraband is forecast to rise this year, putting even more pressure on the industry.

Liem said sugar producers face difficulties such as lack of funds to pay off their debts to sugarcane farmers and the high interest rates on bank loans.

Nguyen Thanh Long, the association's chairman, said though the producers cut prices, sales remain poor.

To reduce stocks, the association submitted a proposal to the Ministries of Agriculture and Rural Development and Industry and Trade to allow members to export 30,000 tonnes of sugar to Indonesia and Singapore and to sell overland to China, and adopt flexible import-export policies, he said.

It also petitioned the Government to order banks to lend more to the sugar industry, he said.

Deputy Minister of Agriculture and Rural Development Diep Kinh Tan said his ministry will discuss solutions for the sugar industry's problems with the Ministry of Industry and Trade next month.

He suggested Government support in terms of funds and lending interest rates so that sugar mills can maintain stocks to stabilise the market.

His ministry would seek approval for export of 250,000 tonnes of sugar as petitioned by the association, Tan said, adding relevant agencies should prevent sugar smuggling into the country.

Global sugar prices continued to fall last week following an increase in supply and a fall in demand due to the European debt crisis. /.