Sugar cane is an important industrial crop in Thailand as the country is the fourth largest sugar cane producer and the second largest sugar exporter in the world after Brazil. However, not only Thailand and Brazil but also many other countries are competitively producing sugar at present. According to information provided by the U.S. Department of Agriculture, sugar production for the world market is increasing, resulting in almost 50 million tons of the product in stock for 2018 to 2109. Since such a huge amount inevitably affects sugar prices, Thai farmers and manufacturers need to consider what position they are ranked in the world and for how long sugar will serve as a major economic product. If they keep working the same way, how will Thailand adjust to future trends in order to enable the farmers and manufacturers to keep up with the rest of the world.
A highly experienced expert and independent academic on Thailand’s sugar cane and sugar production, Dr. Pipat Weerathaworn, a member of the Committe of Thailand Society of Sugarcane Technologists (TSSCT) and an agricultural professional in the National Research Council of Thailand (NRCT), has conducted research and development with the well-known Wang Khanai Sugar Factory. Before working with the National Science and Technology Development Agency (NSTDA) of Thailand, he was the director of the Sugar Cane and Sugar Research Institute Foundation. Subsequently, he was the director of research and development for Mitr Phol Sugar Corp. and PTT Chemical Pl. Co. Ltd.
“Thailand”, The Leading Sugar Producer and Exporter in the World
In terms of sugar production, Dr. Pipat said that Brazil was currently ranked first because it produces about 700 million tons yearly. India is second with over 300 million tons of sugar exported. Thailand is in third place as it produced 135 million tons of sugar last year, followed by China, which exported 100 million tons.
Dr. Pipat explained that, despite a large amount, only 10 to 40% of sugar was successfully produced out of all the sugar cane grown. For instance, Brazil planted 700 million tons of sugar cane, resulting in 70-80 million tons of sugar. The net amount of sugar produced in Brazil, nevertheless, is only 35 million tons because half of it is used for ethanol production. Brazil is still the first sugar exporter no matter what.
With regard to the export of sugar, Thailand has recently been ranked second because the country produced 14 million tons of sugar last year, 2.5 million tons of which was for local consumption while 11.5 million tons were exported. Most of the sugar produced here is generally sold in Asia, making Thailand the No. 1 sugar exporter in the region.
China normally produces about 12 million tons of sugar, but all is for local consumption. At the same time, 4 million tons of sugar are produced in Australia, and, although about 3 million tons or 80% of the product are for export, the total amount is still less than Thailand’s.
“So, if we say that Brazil is the biggest sugar exporter in the west then Thailand is the biggest in the east,” said Dr. Pipat.
However, Dr. Pipat added that some Asian markets were competitive because sugar consumption depended on the product’s quality and price. Consequently, some markets in South Korea, Russia or the Middle East enjoy sugar imported from other countries. Yet, in comparison with its neighboring markets, Thailand still owns Asia in terms of sugar exports.
“Many Thai people usually talk about sugar cane prices or costs per capital. As a matter of fact, if we talk about overall competition, we should consider sugar production costs per ton. Then, we will think about the cost of sugar cane and sugar production,”
stated Dr. Pipat.
Promoting Production Effectiveness and Increasing Competitive Capability
What makes Dr. Pipat especially concerned is the drop in Thailand’s production capability to compete against other countries in the world market. This is mainly caused by sugar’s price. Now, sugar production in Thailand costs between 0.13-0.15 US Dollar per pound (equivalent to 9.29-10.27 Baht per kilo), but the world market price of sugar is 0.11 US Dollars per pound (7.86 Baht per kilo). So, production effectiveness should be improved until the local cost becomes less than that of the world market.
Dr. Pipat added that sugar canes harvested in Thailand are a little less than in Brazil and Australia as the former produces 12.5 tons of sugar canes per hectare while the latter gets 13 or 14 tons per hectare. In terms of sugar proportion found in sugar canes, the sugar canes planted in Thailand have 12% of sugar while those from Brazil and Australia have 13-14%. In addition, a governmental statistical report points out that sugar factories in Thailand can extract 108-109 kilograms of sugar from one cane while those in Brazil and Australia can obtain 120-130 kilograms. Although the proportion does not make much difference, the effectiveness of Thailand’s sugar production is lower than that of other countries when the production of sugar canes per hectare, and the proportion and extraction of sugar in sugar canes are taken into consideration. These factors increase production costs, as well.
“Many Thai people usually talk about sugar cane prices or costs per capital. As a matter of fact, if we talk about overall competition, we should consider sugar production costs per ton. Then, we will think about the cost of sugar cane and sugar production,” stated Dr. Pipat.
Dr. Pipat also considers that, in the past, imprecise product evaluation and excessive production due to too much rain caused an oversupply in the world market and lowered the price of sugar. Thailand once produced a hundred million tons of sugar, but, it managed to reach 135 million tons last year, an equivalent of almost 40%. Certainly, it affects sugar stocks and other elements of the supply chain.
Public, Private & Academic Cooperation to Promote Sugar & Sugar Cane Technology
Types of sugar canes are also a crucial factor in sugar production. Sugar canes planted in Thailand now are very good. At the same time, the research and development of sugar canes in Thailand is not inferior to that in other countries, especially in Asia. Dr. Pipat gave an example of Khon Kaen sugar canes 3 and LK 92-11 in experimental planting lots. The two types yield 15-20 tons of sugar canes per hectare. However, the reason why farmers have only 12-13 tons of sugar canes per hectare is because of weather conditions and problems with passing on knowledge of sugar cane plantation, such as soil preparation, fertilizer use and learning from successful farmers promoted by public campaigns or agricultural groups and academics.
Dr. Pipat explained that proper harvesting of sugar canes also affected sugar proportion since a farmer who cuts the base of a sugar cane 5-10 cms. from the soil will leave 300-500 kilograms of the product worth 400 Baht. Moreover, the base of the sugar cane is the sweetest part. To make things worse, some farmers burn down sugar canes and leave them before harvesting, reducing sugar proportion to 0.5-1% per day.
“We’ve lost a lot both in sugar plantations and factories. So, if we try to prevent losing sugar proportion, both in the farm and factory, even in the short term, we can produce 5-10% of sugar more than the amount we obtain right now,” explained Dr. Pipat.
In addition, Dr. Pipat asked the relevant public agencies to campaign against burning sugar cane plantations and to introduce a harvesting machine and a chest to stock the product. Doing so will boost the farmer’s income even in the short term.
Dr. Pipat said that he believed that Thailand did not lack the knowledge, but needed an effective management system, which would rely on public sectors, farmers and academics. Their cooperation would help advance the sugar and sugar cane industry in Thailand continuously until the country supersedes others.
“Bioeconomy”, a New Hope for Farmers and Factories
Dr. Pipat pointed out that, if one talked about income sharing systems of sugar products in Thailand, this income depended entirely on sugar sales. 70% of the income belongs to farmers and 30% to sugar manufacturers. For instance, if Thailand produced 10 million tons of sugar, each of which could be sold for 10,000 Baht, then the total income would be 100,000 million Baht. 70,000 million Baht of the total income would belong to all the farmers in the country. However, in the past years, the income from selling sugar dropped due to the world market’s price. One solution to boost income in the long run is to transform sugar canes into other kinds of products besides sugar.
Dr. Pipat finally added that the government currently had a campaign called, Bioeconomy, of which sugar and sugar canes are major goods because production systems are consistent. Public and private sectors can add value to sugar by transforming it into bioplastic or biochemical products, which will increase income from 10,000 Baht to 15,000 to 20,000 Baht or even 100,000 Baht per ton of sugar. Although the price depends on product types, the idea can be implemented as a long-term policy.