Thailand Govt Approves the 880 Baht/Ton Initial Cane Pricing Policy 2017-18

Government spokesperson Maj. Gen. Sansern Kaewkamnerd stated that the Cabinet approved two sets of initial cane prices and returns for sugar production and distribution for the production season of 2017-2018 as proposed by the Ministry of Industry as follows:

1. For Zones 1, 2, 3, 4, 6, 7, and 9, the initial cane price is set at 880 baht per ton of for cane with a commercial cane sugar (CCS) sweetness level of 10, and an increment of 49.8 baht per C.C.S. per ton. The return for sugar production and distribution for the 2017/18 production season is set at 377.14 baht per ton of cane.

2. For Zone 5, the initial cane price is set at 830 baht per ton of for cane with a C.C.S. sweetness level of 10 and an increment of 49.8 baht per C.C.S. per ton. The return for sugar production and distribution for the 2017/18 production season is set at 355.71 baht per ton of cane. Maj. Gen. Sansern said that Zone 5 was assigned a different set of prices because the cane quality in Suphanburi was inferior to that in the remaining zones.

Mr. Narathip Anantasuk, Head of the National Federation of Sugarcane Planters and Head of the Office of Sugarcane Planter Association Zone 7, said, “The price of 880 baht/ton of cane is an estimated price that must be declared before the beginning of the crushing season, which was in November 2017. This price was approved by the Board of Cane and Sugar. However, with new changes made to comply with the WTO agreement, the government may no longer subsidize sugar prices, the A, B, and C quotas have been abolished, and the sugar prices are floated. Therefore, this year’s initial cane prices were announced later than usual.”

This initial price of 880 baht/ton of cane is lower than the production cost (1,056 baht/ton). However, since it has already been announced, cane farmers have only global sugar prices to make up for their losses. If the price drops to 14 cents/pound, as opposed to 16 cents/pound last year, the question is how the difference will be made up for. It is speculated that the Cane and Sugar Fund will not have sufficient money to compensate the sugar mills. Therefore, the solution would be for the three parties (the Industry Ministry, cane producers, and sugar mills) to have a discussion. “Currently, the financial status of the Cane and Sugar Fund is being assessed in anticipation of potential compensation, which could amount to approximately 10 billion baht,” said Narathip.

The Cane and Sugar Fund has so far retained its ability to provide monetary support by obtaining parts of sugar sales when sugar prices reach 1,000 baht/ton of cane via the 70:30 profit sharing systems.

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