COVER STORYSUGAR PRICESSUGAR THAILAND

Rise Sugar Industry to overhaul the Sugar System of Thailand

In a marked departure from the nation’s stance since the 1980s, a global subsidy drama has forced Thailand to move closer to a float.
The government has tried to reform the sugar system to free up the industry for almost two years to float the domestic retail price from a fixed 23.50 baht per kilogramme.

The fixed price has been in place since 2009, when the administration also revoked the sugar quota system. On Jan 15, the government invoked Section 44 powers to excise Section 17 (15) of the Cane and Sugar Act of 1984, which caps the sugar price for domestic consumption. The government also used to set aside three quotas each year to prevent sugar shortages.

Quota A set aside 2.2-2.5 million tonnes of sugar for domestic consumption. Quota B designated 800,000 tonnes for state-run sugar exports. Quota C covered the quantity of sugar to be exported by private sugar millers.

Section 44 was used to cancel the five-baht collection from the factory price going to the Cane and Sugar Fund.

The Office of the Cane and Sugar Board (OCSB) said the government is still considering revising other sections of the 1984 Act, which has been in the amendment process since 2014.

The liberalisation plan remains partial, but some mechanisms have been kept to continue indirectly subsidizing sugar farmers, particularly the 70:30 profit-sharing ratio, whereby 70% of total sugar revenue made each year goes to farmers, with the remaining 30% allotted to millers.

Krungsri Research, a think tank under Bank of Ayudhya, expects the 70:30 profit-sharing ratio to help all 54 sugar millers achieve stable gross margins and strengthen the sugar supply chain to offer many related products and invest in the higher-value sugar sector that utilises molasses and bagasse. Sugar millers will have lower revenue growth from this system.

Ms.Warawan Chitaroon, Secretary General of the cane and sugar board (OCSB)

Sugar is Country's Key Crop

Warawan Chitaroon, the OCSB secretary-general, said Thailand’s agriculture sector is highly competitive, diversified and specialised, so some crops are being regulated and subsidised to support planters and farmers.

The fixed price has been in place since 2009, when the administration also revoked the sugar quota system. On Jan 15, the government invoked Section 44 powers to excise Section 17 (15) of the Cane and Sugar Act of 1984, which caps the sugar price for domestic consumption. The government also used to set aside three quotas each year to prevent sugar shortages.

“Sugar is the country’s most important crop because Thailand is the world’s fourth-largest sugar producer and second-largest exporter,” she said.

This year Thailand has produced 14.71 million tonnes of sugar, up 46.7%, from sugar-cane output of 134.93 million tonnes, up 45.2%.

The sugar-crushing season usually runs from November to May. Sugar supply for domestic consumption fell by 3% to 1.9 million tonnes during the first eight months, while exports for the period jumped 50% to 7.54 million tonnes, according to the OCSB.

The board expects this year’s domestic consumption to top 2.6 million tonnes, down 11% from 2017, while sugar shipments are seen reaching an all-time high above 11 million tonnes, up 58.5%.

India’s measures have brought global sugar prices to a 10-year low by allotting US$760 million (25.1 billion baht) to increase sugar-cane prices for local farmers and subsidise transport costs to ports for 5 million tonnes of sugar exports.

In response, Thai sugar millers teamed up with the Global Sugar Alliance for Sugar Trade Reform and Liberalization (GSA) to file complaints with the World Trade Organization (WTO) and seek abolition of India’s subsidy.
Thai sugar millers, consisting of the Thai Sugar Producer Association, the Thai Sugar and Bio-Energy Producers Association, and the Sugar Industry Trade Association, are joining the GSA, headed by sugar producers Brazil, Australia, Guatemala, Colombia, Chile and Canada, to call for the WTO as an arbitrator to act on their complaints.
The International Sugar Organization quoted the sugar price at 12.78 US cents per pound on Thursday.

Narathip Anantasuk, head of the National Federation of Sugarcane Planters, said the global sugar price is expected to drop continually as output increases from main producers such as India, Pakistan and China. “The oversupply situation is expected to continue in the next few years,” Mr Narathip said.

Supply Glut

Thai sugar millers called for the OCSB to start the sugar-crushing season on Nov 15, two weeks earlier than usual, but the board has yet to announce the season.

The operators said they need 140 days in the 2018-19 season to produce sugar. The OCSB regulates
sugar-cane plantations and sugar production, while millers have the Thai Sugar Producer Association, the Thai Sugar and Bio-Energy Producers Association, and the Sugar Industry Trade Association as trade groups.

Siriwut Siempakdee, chairman of public relations for the three associations, said sugar millers forecast the volume of sugar cane for the new season at 120-125 million tonnes, well below the level of the previous season, which ended in early May and resulted in 135 million tonnes.

Mr Siriwut said the projection is considered a high volume for sugar millers. He said millers accelerated production in the previous sugar-crushing season, but some factories could not end the season before Songkran.

New Prices Set

Ms Warawan said the OCSB has set the initial price for two sets of sugar cane in the 2018-19 sugar-crushing season.

“The initial sugar cane price is set at 680 baht per tonne, and the commercial cane sugar sweetness level is 12.30,” she said.

Ms Warawan noted that the OCSB approved a budget to help farmers with up to 50 baht per tonne for 5,000 tonnes per person, so farmers will get a sugar-cane price of 880-900 baht per tonne. The OCSB will support farmers in using technology to increase sugar-cane yield to 15% from 11% because expanding sugar-cane plantations is difficult in Thailand.

Bioeconomy

Industry Minister Uttama Savanayana said the government will promote the sugar industry to create
value-added products under the bioeconomy policy.

The government has allocated 500,000 tonnes of sugar for ethanol production, aiming to cut production cost.

Many ethanol producers are facing rising costs from cassava because of higher demand in the feedstuff sector.

“Farmers will be able to move away from producing only commodity-grade sugar for export, which exposes them to volatile global prices,” Mr Uttama said. “Biochemical development is aimed at helping them increase crop prices, create higher value-added products and stabilise prices.”

The bioeconomy plan has been implemented in northeastern and northern provinces since April, when the cabinet approved the measure.

Mr Uttama said the government chose three provinces for the project — Khon Kaen, Nakhon Sawan and Kamphaeng Phet — where there are massive volumes of cassava and sugar cane.

The government plans to develop the project during 2018-26 in accordance with the Pracha Rat initiative.

“Thailand is set to be the biochemical hub of Southeast Asia by 2027, focusing on bioplastics and biochemicals,” Mr Uttama said.

Companies such as Thai Beverage, Global Green Chemicals, Mitr Phol Group, Purac Thailand, Corbion Group and Kaset Thai International Sugar Corporation are interested in the biochemical plan.

The biochemical industry is one of the government’s top priority sectors, with expected investment value of 130 billion baht by 2027.

By that year, the project is expected to increase farmers’ income by up to 85,000 baht per person per year, create added value for agricultural products of roughly 400 billion baht and employ more than 800,000 people nationwide.

Digital Edition

vulkan vegas, vulkan casino, vulkan vegas casino, vulkan vegas login, vulkan vegas deutschland, vulkan vegas bonus code, vulkan vegas promo code, vulkan vegas österreich, vulkan vegas erfahrung, vulkan vegas bonus code 50 freispiele, 1win, 1 win, 1win az, 1win giriş, 1win aviator, 1 win az, 1win azerbaycan, 1win yukle, pin up, pinup, pin up casino, pin-up, pinup az, pin-up casino giriş, pin-up casino, pin-up kazino, pin up azerbaycan, pin up az, mostbet, mostbet uz, mostbet skachat, mostbet apk, mostbet uz kirish, mostbet online, mostbet casino, mostbet o'ynash, mostbet uz online, most bet, mostbet, mostbet az, mostbet giriş, mostbet yukle, mostbet indir, mostbet aviator, mostbet casino, mostbet azerbaycan, mostbet yükle, mostbet qeydiyyat