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Thailand must overhaul sugar industry to solve WTO problem, TDRI warns


Planned changes to the Sugar Cane and Granulated Sugar Act will not solve Thailand’s problems at the World Trade Organisation (WTO), the Thailand Development Research Institute (TDRI) warned on Thursday.

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The law is being amended after Brazil complained to the WTO in 2016 that Thailand’s subsidy measures had led to dumping of Thai sugar in foreign markets, violating WTO rules. The measures cited by Brazil include the sugarcane price guarantee scheme, soft loans to farmers, and the ethanol subsidy scheme, which uses molasses as a major ingredient.
Since 2018, Thailand’s Sugar Cane and Granulated Sugar Committee has issued five measures to regulate the sugar price, says Viroj Naranong, Health Economics and Agriculture Research director at TDRI.
“As a result, in almost three years, the price of sugar in domestic markets has drastically gone down, which has greatly affected the revenue of sugarcane farmers.”
A draft amendment proposed by government MPs to remove sugar subsidies would not solve Thailand’s dumping dispute at the WTO, warned Viroj. Nor would a proposal by opposition MPs and farmer associations to add molasses and other byproducts as factors in the sugarcane price calculation to increase domestic prices.
“These amendments may not solve the low sugar price problem as they do not focus on restructuring the sugar industry and profit-sharing scheme, which is the biggest challenge Thailand faces in trying to comply with WTO regulations.”
Instead, the domestic sugar price could be lifted by applying a price calculation formula that uses standardised criteria instead of different byproducts that might have no acceptable reference prices,” said Viroj.
“There should also be an independent fund for maintaining sugar price stability that has separate regulations and sources of money than the Sugar Cane and Granulated Sugar Fund.”
This should serve as emergency fund to compensate sugarcane farmers when necessary, he said. It could be supported by government budget or loans from state backed banks, he added.

Published : November 26, 2020

By : THE NATION