Loans for PM2.5 Reduction: Major Step for Thailand’s Cane and Sugar Industry

Thailand has been facing air pollution for a long time, with dust levels rising between December and March each year. PM2.5 levels often reach a point that negatively affects health, impacting the respiratory system, skin, and eyes. The problem stems from multiple factors, including transportation, forest fires and wildfires, the construction industry, and agricultural burning—an issue that has gained significant attention over the past four to five years.

This article, presented by a local news agency of Thailand, explores the perspectives of entrepreneurs and farmers in the cane and sugar industry, who have been blamed for contributing to pollution—one of the causes of PM2.5 dust. It also discusses the issue of “burnt cane” and the measures being implemented to promote sustainability and environmental friendliness.

Labor Shortages: Root Cause of Cane Burning

Deep within a cane plantation in Bo Phloi District, Kanchanaburi, the entrance is a dusty red dirt road, kicking up clouds as vehicles pass through. Towering cane stalks, over two meters high, stretch as far as the eye can see. Equally prominent are the cane harvesters and numerous trucks essential for the harvesting process. Mr. Piripon Chinthammit, Vice President – Support Division of KSL Group, a leading sugar and cane industry operator, arrives on-site with his team from KSL Group.

KSL Group operates a total of five sugar mills in Thailand and one in Laos, bringing nearly 80 years of experience in the sugar industry. Throughout its operations, the company has encountered numerous challenges, with three key issues requiring continuous solutions: labor shortages, contaminants, and pollution—factors that impact both the industrial system and the environment.

“Sometimes burning is inevitable, and to be honest, no one actually wants to burn,” Mr. Piripon began explaining when we asked about burnt cane.

Harvesting cane is a labor-intensive task that requires working outdoors in high temperatures. As a result, fewer young workers are taking up the job, leaving most of the remaining workforce aged 50 and above. With fewer cane harvesters and the pressure to work against time, a major challenge arises—contaminants mixed in with the harvested crop. Since cane must be delivered to the factory on the same day to prevent quality deterioration, cleaning the cane before loading it onto trucks takes additional time. This, in turn, reduces the efficiency of both the production process and the factory’s overall performance.

He emphasized that air pollution was another national-level issue. While burning makes harvesting more convenient, it contributes to PM2.5 dust pollution. However, the cane and sugar industry operate on a profit-sharing system—when factory efficiency declines, farmers receive lower payments for their cane, creating a chain reaction that affects the entire system. Although all stakeholders recognize the importance of addressing cane burning, not everyone has the means to effectively manage the problem.

Cane Harvesters: Solution that Comes at a Cost

In reality, neither farmers nor factories want burnt cane, and no one wants to set fire to the crops they have cultivated with their own hands. However, at times, burning becomes a necessity. As a result, the cane industry has been blamed for contributing to PM2.5 pollution. Other agricultural sectors also engage in burning, but usually after harvesting, whereas cane is the only crop that is burned before harvesting. Although the industry has a tripartite committee—including factories, farmers, and government representatives—that collaborates to record yield data, measure weight, and set purchase prices, an incentive system has been implemented to discourage burning. Fresh cane is priced higher than burnt one to encourage more sustainable practices. Another key shift in addressing both labor shortages and the need for fresh cane is the adoption of mechanized harvesters. These machines can significantly reduce reliance on manual labor and increase the supply of fresh cane to factories. However, the biggest obstacle is cost. The average price of a cane harvester in Thailand ranges from 5 to 8 million baht, and imported machines are even more expensive. This makes financing a crucial factor in integrating more harvesters into the system, ultimately replacing manual labor and reducing the need for burning.

Mr. Piripon explained that the key policy of the cane and sugar industry is to increase the proportion of fresh cane while reducing burning, alongside addressing labor shortages. This effort led to discussions with the Bank of Thailand to find collaborative solutions. As a result, New Krung Thai Sugar Factory Co., Ltd., a subsidiary of KSL Group, signed an agreement to participate in the Sustainable Loan (ESG) Program with Krung Thai Bank. This initiative aims to tackle the PM2.5 pollution issue while aligning with the Ministry of Industry’s policy to promote sustainability and environmental responsibility.

The loan received enabled New Krung Thai Sugar Factory Co., Ltd. to purchase an additional 10 cane harvesters, allowing the company to process up to 100,000 tons of fresh cane per year, equivalent to 10,000 rai of cane fields. The company also provides 50 cane harvesters as a service to its member farmers. As a result, with the reduction in burnt cane, pollution emissions are also reduced, leading to improved efficiency. This initiative not only enhances the company’s image but also builds trust with both domestic and international partners.

“We believe that preserving the environment will help sustain the cane and sugar industry as a whole.”

Aside from the cost factor, the use of cane harvesters also has space limitations. For the harvesters to operate effectively, trucks must accompany them to collect the harvested cane, and there needs to be enough width to allow the harvesters to turn around. This method is more suitable for large-scale plantations, meaning farmers need to adjust their cane fields to accommodate the use of large machinery.

Voices from Farmers: “Cane Harvesters or Manual Labor?”

Mr. Watcharapong Vichaiwongwat, owner of Bo Daeng Agricultural Farm, an 800-Rai-land plantation in Kanchanaburi, shared that he wanted to expand his planting area but faced a severe shortage of cane harvesters. As a result, he applied for a loan from Government Savings Bank to purchase a cane harvester. Previously, his farm employed 50-70 workers, but now only 20 workers remain due to the labor shortage.

Using cane harvesters results in better weight retention, as burning reduces the weight of the cane, leading to lower selling prices. Typically, burnt cane is discounted by 30 baht per ton and does not qualify for participation in government programs or financial support, which are designed to encourage farmers to reduce or eliminate illegal burning and switch to harvesting fresh cane instead. “Having machinery and technology will make farming easier for farmers, which is beneficial for the younger generation who will take over cane farming in the future. More importantly, it will help reduce PM2.5 dust. Additionally, the leftover cane leaves can be sold as biomass fuel for power plants, or if left to decompose, they will enrich the soil. Burning destroys the soil surface and makes the soil hard.”

Mr. Chunlai Saetae, the owner of Po Charoen Farm, a 500-rai-land plantation in Kanchanaburi, with an annual cane production of 8,000-10,000 tons, shared that he had been carrying on the family tradition of cane farming for 20 years. In the past, he hired laborers from the Northeastern region of Thailand, but as the labor pool shrank and it became difficult to find workers, he switched to hiring people from nearby areas. Despite this, he still faced challenges in harvesting the cane in time to meet factory delivery deadlines.

“We used to burn at our farm, but we encountered problems with poor soil quality, making it harder to grow cane. There were also diseases, and we had to spend on weed control. Moreover, burning led to harvesting more than what we could manage, leaving burnt cane overnight, losing weight. If it rained, that field would become unusable.” After 12 years of cane farming, someone recommended using a cane harvester, but I couldn’t afford it due to the high cost.

“But we received a loan from the Bank for Agriculture and Agricultural Cooperatives (BAAC), which gave us the opportunity to purchase a small cane harvester for use on the farm. This allowed us to manage the harvesting time according to the cane’s age and optimal sweetness level on our own.” Although the planting area needed to be adjusted to accommodate larger machinery, Mr. Chunlai views it as a worthwhile investment, as it helps reduce the time needed for harvesting and increase overall yield.

Mr. Piripon concluded, saying, “The most important thing that will bring about change is collaboration with everyone around you. No task can be done alone. Even if we set great goals for reducing carbon emissions, it won’t succeed if those involved don’t cooperate. Since everyone plays a role in carbon emissions, for sustainability to be achieved, it must be a collective effort.” This is just the beginning of a transformation in one industry. As Mr. Piripon emphasized, this goal cannot be achieved alone, but everyone is an essential part of this transformation.

Pilot Loan Program to Reduce PM2.5 Dust in the Cane and Sugar Industry

The financial support provided to the cane and sugar industry to adjust their harvesting processes, aimed at reducing cane burning and PM2.5 dust, is a pilot project under the Financing the Transition initiative. This program is designed to help the business sector transition toward environmental sustainability, tailored to the Thai context. It emphasizes the need to reduce the environmental impact (from brown to less brown) in the industry.

In the past, the government implemented subsidy measures to encourage farmers to harvest fresh cane and reduce burning. However, effective fresh cane harvesting requires funding for land adjustments and the purchase of agricultural machinery. Therefore, the Bank of Thailand (BOT), in collaboration with Krungthai Bank, Siam Commercial Bank, Bank for Agriculture and Agricultural Cooperatives (BAAC), and the Office of the Cane and Sugar Board, has promoted a pilot loan program to adjust the cane harvesting process and purchase agricultural machinery. This initiative aims to support the government’s policy to address PM2.5 dust issues.

For businesses interested in this loan, they can contact the business relation managers at any branches of the participating banks.