Sweet things in store for sugar industry

Prasert Tapaneeyangkul, secretary-general of the Office of the Cane and Sugar Board, envisaged yield increasing from 11.08 tonnes per rai (69.25 tonnes per hectare) to 15 tonnes per rai in three years, higher demand from Asian countries, and greater demand for production of ethanol and bioplastics. Notably, 50 per cent of sweeteners consumed in China are artificial because of a production-capacity shortage.

“Thailand is now the second-largest sugar exporter after Brazil, despite the much smaller plantation area,” Prasert told a news conference yesterday. “Our main competitors are Brazil and Australia. Our competitive edge lies in our geographical location, which offers convenient transport.”

Yet to achieve prosperity, Thailand has to overcome four major challenges: production costs, logistics costs, technology, and government policies on development of alternative energy and bioplastics.

Prasert said the cost of sugar-cane production in Thailand was 16 US cents (nearly Bt5) per rai, against 21-22 cents in Brazil. It is a must that the upstream output be increased constantly, at lower cost, he said, adding that there was a need to enhance logistics capacity to maintain sugar-cane freshness en route to mills, domestic distributors and export channels. 

Meanwhile, millers will need to introduce new technology to produce niche products, which carry higher profit margins. Demand for refined sugar is on the rise, particularly in the pharmaceutical industry, he said. 

Last, the sugar industry’s growth will be sustained if policies on alternative energy are clear, and there is no reversal when oil prices are declining. Higher yield will raise output, and these policies could ensure that there will not be a problem of oversupply. In the next few years, two bioplastics plants will commence operations, initially requiring 50,000 tonnes of sugar cane.

Along the way, he sees the need for the industry to reduce its carbon footprint.

The country’s 1 million farmers have largely enjoyed higher output and price, boosting the industry’s income to Bt200 billion. Sugar output in the 2011-12 harvest season hit 97.70 million tonnes as of May 3, a sharp increase from 68.48 million in 2009-10 and 95.36 million tonnes in 2010-11. Output for this year is expected to remain at last year’s level, depending on the weather conditions.

The benefits would have been higher if domestic prices were brought nearer global levels, which jumped to 36 cents per ounce in February before falling to 22 cents currently. 

Prasert said restructuring of the domestic sugar price was slated for completion in September, which will allow automatic changes in domestic prices and require the sugar fund to play a bigger role in compensating farmers and consumers when the prices are higher or lower than global levels.

When the AEC comes into force, the restructuring will help insure against smuggling by eliminating price differences from global levels. 

“Thailand will benefit from the AEC, as we are now the biggest regional supplier,” Prasert said. “Yet with opportunities come risks, as openness will bring about the cross-border transport of plants, which may introduce new diseases, as well as a huge number of workers, particularly when 10 more sugar mills are opened in the next five years.

“The price restructuring will create a buffer that allows sustainable development in the industry,” he said.