Rule change to allow the set-up of new sugar mills
The legally required minimum distance between sugar mills is likely to be reduced in response to expected increases in sugar demand, said Somsak Suwattiga, secretary-general of the Office of the Cane and Sugar Board.
At present, sugar mills must be located at least 80km apart to ease competition for raw materials. Somsak said licences would be issued to new sugar mills that can secure raw materials of at least 50 per cent of crushing capacity. The board will convene in mid-July.
Ten new sugar mills for which the Cabinet recently approved licences have yet to get off the ground due to the minimum-distance rule, as well as delays in environmental impact assessment reports (EIAs), Somsak said. These mills must be set up within five years of the issuance of their licences.
“We want to speed up the establishment [of the mills], as sugar cane output is rising. In the 2012/2013 harvest year, some mills’ crushing period was extended from the 120-day limit to 180 days, resulting in lower quality and lower sugar output,” he said.
Chalat Chinthammit, an executive from Khon Kaen Sugar Industry, supported the change in the rule, saying it would benefit the sugar industry. He was concerned about delays in the change, as well as the sufficiency of raw materials.
Expected sugar-cane output is estimated at 110 million tonnes in the 2013/2014 harvest year, up from 100 million tonnes in the previous year. This is expected to rise to 130 million tonnes and 180 million tonnes in the 2015/2016 and 2018/2019 harvest years, respectively.
Somsak said this is in line with the expansion of plantation area for sugar cane due to complications with other economic crops: for example, tapioca prices are falling, while rice is subject to the complicated pledging process. Sugar plantation areas in the 2013/2014 harvest year increased to 11 million rai from 10 million rai the previous year.
The Cane and Sugar Board will also be asked to raise the domestic consumption quota by 165,000 tonnes to 2.65 million tonnes to cope with increasing demand and to prevent hoarding. It will also consider two loan programmes: Bt1 billion to address drought and Bt3 billion to finance truck purchases. Under the programmes, farmers would pay 2 per cent to the Bank for Agriculture and Agricultural Cooperatives and the board would subsidise the remaining interest burden.
