Global Sugar Industry Volatile, Thailand Adapts to Sustainable Demand
The sugarcane and sugar industry is one of the main mechanisms of Thailand’s economy, holding strategic importance for both the agricultural sector and related industries. It covers over 10 million rai of cultivated land and involves more than 300,000 farm households. It connects the supply chain from cultivation and processing to downstream products such as ethanol, biomass energy, and paper from bagasse. This industry not only generates a total income of over 180 billion baht per year but also impacts the quality of life in many provincial communities.
Mr. Bainoi Suwanchatree, Secretary-General of the Cane and Sugar Board (OCSB), stated that Thailand ranks second in the world for sugar exports, behind Brazil, which leads with a production capacity of over 600 million tons per year, compared to Thailand’s approximately 94 million tons per year. Furthermore, Brazil has the advantage of a longer crushing season, lasting more than 8 months per year, while Thailand can only produce for 4 months. This results in Thailand’s production cost being higher than the global average, at 18% per pound, compared to Brazil’s 13–15% per pound.
Global Market Trends Focus on Environmental Issues
This limitation reflects that Thailand must create “quality and sustainability differentiation” to meet the demands of the global market, which is increasingly prioritizing environmental standards and social responsibility rather than competing solely on price.
One of the significant challenges is the reduction of burnt sugarcane, which causes air pollution and the PM2.5 problem. In 2018 (B.E. 2561), fresh sugarcane accounted for only 35%. However, thanks to government promotional measures and private sector investment, this proportion has now increased to over 90%. The target is to reduce burnt sugarcane to less than 10% in the 2025/2026 (B.E. 2568/69) production season.
“Support measures, such as a subsidy of 69 baht per ton of fresh sugarcane, the provision of sugarcane leaf stripper machine, and investment in sugarcane harvesters, are crucial tools in incentivizing farmers to transition to green agriculture. Simultaneously, they also increase raw material security for sugar mills.”
Clean Energy Manages Agricultural Waste
A source from the Mitr Phol Group stated that the company has accelerated investment in “biomass power plants,” using bagasse, sugarcane leaves, and rice straw as fuel, with a total capacity of several hundred megawatts. Some locations are also setting goals to further expand clean energy electricity production, such as the Mitr Phu Luang Sugar Mill, which currently produces over 67 megawatts and plans to add another 30 megawatts in the future.
In addition, developments are being made across several dimensions:
Renewable Energy: Using solar farms and electricity from biomass to reduce reliance on fossil fuels.
Digital Transformation: Reducing paper consumption by over 400,000 sheets per year through a digital platform, and converting oil-powered forklifts to electric.
Low-Carbon Logistics: Expanding the use of electric trucks (EVs) for sugar transport, as well as connecting the Laem Chabang port with electric-powered prime movers (tractors/haulers).
The company also aims to reduce greenhouse gas emissions by 42% by 2030 (B.E. 2573) and achieve Carbon Neutrality by 2050 (B.E. 2593), by utilizing the “Reduce–Reuse–Recycle” approach alongside investments in technology and sustainable water management.
Policy Proposals for Sustainable Sugarcane Farms
The policy proposals are divided into the following:
- Farmer and Raw Material Production. Increase incentives for planting fresh sugarcane through appropriate subsidies and support for agricultural machinery, such as sugarcane harvesters and leaf strippers, to address labor shortages and reduce production costs.
Expand the model project “Sustainable Sugarcane Farm” in pilot areas by integrating irrigation systems, soil management, and the use of organic fertilizers to increase yield per rai and reduce environmental impact.
Create a sugarcane price insurance mechanism to reduce farmers’ income risk from the volatility of global market prices.
- Industry Factories and Supply Chain Industry Factories and Supply Chain: By supporting investment in clean technology, such as water recycling systems, combined heat and power (CHP) systems, and the use of electricity from solar combined with biomass. Developing a Circular Economy model by processing production waste, such as bagasse, sugarcane leaves, and bagasse ash, into fertilizer, construction materials, or value-added products, and establishing a Traceability System to meet environmental and trade standards in international markets.
Target: 95% Fresh Sugarcane by 2030
- Environment and Energy. Extend and adjust the purchase price for biomass electricity to a level that incentivizes the private sector and reflects the actual cost, ensuring the long-term sustainability of biomass power plants.
Establish a mandatory target (Regulation + Incentive) for reducing burnt sugarcane, setting a goal of not less than 95% fresh sugarcane by 2030 (B.E. 2573), along with penalty measures for non-compliance.
Develop area-based water management plans to cope with the risks of climate change and reduce water competition between the industry and communities.
- Government Policy and Global Trade Set the long-term development direction for the sugarcane and sugar industry and the renewable energy sector, by integrating it with the country’s Net Zero targets. Utilize Free Trade Agreements (FTAs) and trade diplomacy to open markets for Green Sugar and bioproducts in the Asia-Pacific and Middle East regions, where demand is high.
Recommend Establishing a Research and Innovation Fund
Including establishing an Sugarcane and Sugar Research and Innovation Fund to support the development of new technologies, such as improving drought-tolerant sugarcane varieties, advanced ethanol production, and biochemical products. Also, to create a central Data Platform to compile industry data on production, carbon emissions, and energy usage, thereby increasing transparency and strengthening confidence among international investors and trading partners.
“A key issue of concern for the private sector is the gradual expiration of the biomass power purchase agreements (Adder). If these contracts are not renewed or if an appropriate power purchase rate is not set, it could impact the viability of investments. Meanwhile, the global market is under pressure from Free Trade Agreements (FTAs), which are intensifying competition in sugar pricing.”
Therefore, the government should set a clear long-term renewable energy policy framework to build confidence in private sector investment, while also considering structural support measures such as low-interest loans for agricultural machinery and incentive measures for farmers who produce high-quality fresh sugarcane.
The Thai sugarcane and sugar industry is at a critical juncture. If it can proceed according to the “Green Agro-Industry” strategy, Thailand will not only maintain its position as a leading sugar exporter on the world stage but will also create a new image for the country as a producer committed to environmental care and sustainability.
