Thai-Indonesian Cane & Sugar Industries under Close Speculation

The present trend of the world market’s sugar does not seem to change much. Despite the on-going spread of Covid-19 in several countries, coping with the infection is different from the previous year thanks to vaccines officiated by the World Health Organization (WHO) which can now be used in many countries. Consequently, economic affairs are expected to be reborn, thus promoting more sugar consumption. If one refers to the world’s biggest and leading sugar producer, Brazil is still ranked the first. The country does not focus on sugar manufacturing only, but it also campaigns on ethanol production. In addition, Brazil has produced more sugar for export. Thailand, however, is still ranked the fourth on sugar production and the second for sugar export following Brazil. Overall, during 2020/2021, sugar in the world market is expected to reach up to around 10%-40%, particularly in the US, India and Brazil.

A farmer worker loads freshly harvested sugarcane onto a truck during this year's harvest season in Purwosekar village in Malang, East Java.

Cane and Sugar Industries in South East Asia

The member of the committee of Thailand Society of Sugarcane Technologists (TSSCT), Pipat Weerathaworn, Ph. D., said in the AGRITECHNICA ASIA & HORTI ASIA digital talks that South East Asia is a region where economic growth was as high as 4%, especially in Indonesia which is one of the biggest countries of the region as 40% of its population come from there. Currently, Indonesia has a total of 60 sugar mills, 41 of which are state owns while 19 are private companies. The country needs more than 5 million tons of sugar for consumption per year. Most of the sugar is imported from overseas. Due to huge consumption, Indonesian government requires increasing local sugar production to serve the national needs.

Since the government aims for increasing sugar production, it is now considering some challenges that need to be dealt with to achieve the goal, namely few areas of cane plantation, decreasing cane products, other competitive crops, shortage of cane research, problems on funding and logistics in terms of sending cane to sugar mills.

According to the latest report, all South East Asian countries imported a total of almost 10 million tons of sugar. Indonesia is the country where around 5.6 million tons of sugar – the highest amount – was imported. Malaysia imported around 2 million tons. In Myanmar, where economic growth is found increasing, more sugar was imported, and the country reportedly produced sufficient sugar for national consumption as well as Vietnam and the Philippines. Brunei and Singapore, by contrast, are reported to obligatorily import sugar for consumption owing to no local production at all. Thailand is certainly the first of ASEAN on sugar and cane production even though the number decreased a couple of years ago. However, Thailand’s products are more than other countries’ as it had 56.4% while the Philippines and Indonesia had 15.8%.

In case of possible development on sugar business in South East Asia, some major challenges, such as high costs of investment, low sugar’s yield rates, high capital costs of production and labor problems, need to be taken into account for evaluation and improvement. Nevertheless, financial support and technology of sugar production and logistics as well as bio-economic based sugar business and circular economy are required.

Indonesia will import additional raw sugar for household usage to meet demand

Sugar Products in Thailand

At present, Thailand has 58 sugar mills throughout the country, with a total production capacity of 1.2 million tons per day. There is a total plantation area of 1.7 million hectares for cane. During the extraction season of 2019/2020, Thailand faced severe drought, making cane products drop to 74.98 million tons and sugar to 8.27 million tons. In terms of problems affecting cane now, the major concerns include dry season despite increasing rainwater as well as low prices of cane, fewer areas of cane plantation and probably labor shortage. All caused sluggish transfer of cane for extraction. However, when considered percentage of overall crops, cane shares 8% of all other crops, or it was ranked the fourth, while other crops like cassava shares only 6%.

Mr. Rangsit Hiangrat, the Director General of Thai Sugar Miller Co. Ltd. (TSMC), revealed that sugar products in Thailand from 2020 to 2021 were expected to reach around 65-67 million tons, the number of which is 75 million tons lower than last year’s. In other words, the number is regarded as the lowest in the past 10 years. Besides, the spread of Covid-19 really affects local sugar consumption, but it is speculated that 2021 will be better in terms of the amount of sugar to be consumed because 2.40 million tons of sugar are projected for local consumption this year. Last year, only 2.32 million tons of sugar were consumed. Results of better management of the viral infection enable economic activities to continue effectively although export is expected to be lower than last year.

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