Tackling Covid-19 Impact on Thailand’s Cane & Sugar Industries

In Thailand, there are currently 57 sugar mills, 10 of which are located in the north, 22 in the northeast, 20 in the central and 5 in the east, with a total of 1.2 Mln TCD. The country has 1.7 million hectares of cane plantation areas, but, averagely, Thai farm owners have as few as 5 hectares to grow sugarcane while over 80% of them still lack irrigation in their plantation. In terms of the sugar mill, major responsibilities lie in financial support, agricultural equipment, cane harvesters as production factors for farm owners. Around 80% of the products will be exported to foreign markets.

Mr. Rangsit Hiengrat, the executive director of Thai Sugar Millers Corp. Ltd., talked about an overall picture of the present cane and sugar industries, highliting that, for the past couple of years, Thailand had faced drought as the water level in Mae Klong River subsided to the lowest for the past 60 years. He thought that drought took place in both Thailand and all over the region, thus low cane production in 2019/2020 to over 40% in comparison with the previous year. Besides drought, the drop of the world sugar price affected the cane price during the last two years, as well. This might make some farmers turn to other crops like cassava.

According to the Thai Sugar Miller Co. Ltd.’s expectation, cane production in 2020/2021 may probably reach to 65-70 million tons and sugar production to around 7-7.5 million tons, making Thailand export less this year. Moreover, Thai government promoted the Green Harvest Policy. That is, local agriculturalists must not have over 20% of burned cane for extraction. Otherwise, they need to pay a fine of 30 Baht per a ton of burned sugar to the mill, which, in turn, must pay a fine of 20 Baht, according to numerical refences to target reduction of burned cane to as low as 20% Information of the Thai government stated that, due to air pollution in the past two years, especially in Bangkok and the north, caused by agricultural burning of wheat, cane, corn farms and crop leftovers, the problem was a major issue every sector had to solve immediately.

The new Corona Virus is spreading in Thailand and other parts of the world; however, the overall situation in the country is getting better. Some business is back to normal. Since the beginning of the viral outbreak, sugar consumption dropped significantly. Mr. Rangsit added that sugar consumption had been actually expected to around 2.5 million tons, but it seemed to be as low as 2.30 million tons in comparison with 2019 when 2.45 million tons of sugar were consumed. The reason was principally closure of restaurants or some commercial areas in the country and lack of tourists during the pandemic, not to mention migrant workers in cane farms who went back home.

Mr. Issara Thawiltermsap, a member of the executive board of Khonburi Sugar Public Co. Ltd., explained that the situation in Thailand was safe to some extent even though local consumption was as low as 10%. All sugar mills in Thailand are however trying to encourage cane plantation as much as possible to reduce the impact of decrease amount of sugar products in the following year.

“Take for example sugar mills under KBS’ supervision which are well-prepared for the outbreak as we had a meeting to plan in advance regarding production procedures. In terms of the lockdown, any overseas and local purchases were carefully handled. We’ll change to an on-line operation platform in case of the pandemic, and, if any sugar mills are unable to function, there will be a big problem,” said Mr. Issara.

Regarding the perspective of restructuring Thailand’s sugar industries due to the spread of Covid-19, Mr. Rangsit explained that, in fact, local sugar industries had been restructured since the last two years, particularly since 15 January 2018, when changes of local sale quotas and export took place. In terms of the impact on the pandemic, the important issue for consideration is how the industries survive the hardship regarding the supply, how to sell more sugar, and how to produce it a lot more for an export at high prices. These are complicated because every sugar mill is facing difficult sale or even financial affairs.

As cane and sugar are an industry that strengthens Thailand, “previously, I talked with an owner of a sugar mill and discuss with him about sales and business development as well as how to increase production, effectiveness improvement, production cost reduction and encouraging cane farm owners to grow more for export. These are important for solutions,” said Mr. Rangsit.

In terms of Thailand’s sugar industry’s future, Mr. Rangsit viewed that governmental support to the industry was very vital because we were at present facing the viral outbreak. The company are always ready to cooperate with the government to help cane farm owners to plant the crop since cane is useful for sugar production as well as energy like biochemicals, which can go further in the future. Besides, the government can provide some financial support to the farmers along with assistance to local agricultural sectors. Regarding the farmers, we have to improve infrastructure, especially irrigation, for both cane and other crops. This is a long-term investment which help develop agricultural sectors a lot since our consumption is daily. Furthermore, Thailand is ideal for agricultural business.

Concerning how to tackle the Covid-19 impact on Thailand’s cane and sugar industries, sugar mill owners have already prepared for risk management in terms of effectiveness increasing of growing cane for sugar mill production as well as promotion of export sales. The Thai Sugar Miller Co. Ltd. Revealed that Thailand’s cane and sugar industries should prepare for effective extraction per a ton of cane as much as possible along with encouraging fresh cane cutting to solve burned cane problems. At the same time, values should be added by using results from sugar production to various products, thus corresponding to the bio-economic policy issued by the government. All of these are factors that help the industries survive, as well.