Sugar Industry Recommended to Adapt to the Eco-Friendly Trend & ESG
The Krungsri Research of Krungsri Ayudhya Bank has released an analysis of Thailand’s sugar industry for the years 2024-2026. The analysis reveals that, in 2024, Thailand’s sugar industry will contract due to drought conditions leading to insufficient production for export. However, the domestic market is expected to continue expanding, driven by the recovery of the restaurant business and the tourism sector.
However, in 2025-2026, the overall industry is expected to expand due to the onset of the La Niña phenomenon, which will create favorable weather conditions. Additionally, the rising sugar prices are likely to encourage farmers to cultivate more. At the same time, the demand for sugar is expected to grow, driven by economic activities and tourism that will boost demand in related industries, particularly in the food and beverage sectors, both in domestic markets and among trade partners.
At the same time, the sugar industry faces challenges from the high costs of sugarcane cultivation, increased sugar taxes in Thailand and several trading partner countries, the global health trend that leads to reduced sugar consumption, and regulatory uncertainties, particularly amendments to the Sugarcane and Sugar Act that could impact the industry’s profits.
According to Krungsri Research’s perspective, it is expected that in 2024-2026, the industry’s revenue will improve in line with the overall expansion of sugar sales. However, the industry’s high reliance on foreign markets makes it vulnerable to fluctuations.
Sugar Factories
Sugar factories are likely to see their revenues gradually improve in line with the increasing demand for consumption, supported by several factors:
- The gradual recovery of purchasing power both domestically and internationally, following the economi
- The expansion of related industries, such as food and beverages, which are likely to grow after the COVID-19 crisis subsides.
- Continued concerns about pandemics, which will sustain demand for alcohol-based disinfectants.
- The demand for ethanol in the transportation sector to support recovering economic activities and investments.
- Government measures that encourage the use of ethanol as a component in gasohol fuel.
Sugar Traders
It is expected that sugar traders in international markets will continue to benefit from the recovery trend of economic activities in partner countries, driven by related industries, the tourism business, and restaurants. However, there may be risks from the volatility of sugar prices, which are expected to fluctuate according to supply conditions and global market prices. This could impact the costs of managing stock inventories.
Cane Growers
It is expected that sugarcane production and sweetness levels will improve due to favorable weather conditions. However, there are still risks of sugarcane price fluctuations following global sugar market prices, while bargaining power remains unfavorable for sugar factories. Additionally, rising cultivation costs, including energy, fertilizers, pesticides, and labor wages for harvesting, especially for fresh sugarcane (compared to 2-3 years ago), affect the net income and planting decisions of farmers.
The Krungsri Research has proposed adaptation strategies for the sugar industry for the coming period, which include:
– Focusing on Supply Stability: Emphasizing farmer cooperatives under the Sustainable Development Goals (SDGs) related to water and the environment. This includes cost management to achieve economies of scale, supporting technology from both the government and sugar factories, and promoting irrigation systems to reduce the risk of future sugarcane shortages. Additionally, adopting the BCG (Bio-Circular-Green) Model to support and assist the industry throughout the supply chain, thereby increasing farmers’ profits while ensuring raw material stability for sugar production.
– Eco-friendly Trends and ESG (Environmental, Social, Governance): Adapting to the strategic goals of both public and private sectors aimed at reducing pollution, especially air pollution, from the sugarcane and sugar industry through various policies and tools. For example, creating a green industry focused on achieving carbon neutrality through innovation and comprehensive smart farming technologies, from planting to transporting sugarcane to factories. This also involves using agricultural machinery to replace labor, purchasing sugarcane leaves to reduce burning, educating farmers on fresh sugarcane cutting to improve the sugar content (C.C.S.), setting policies for purchasing fresh sugarcane, and implementing measures to address the problem of burnt sugarcane.
