ASEAN KEY DESTINATIONS
Thai minister may liberalize sugar industry
Industry Minister Chaiwuti Bannawat has threatened to liberalize sugar mills should local sugar prices have to be floated to reflect the global market.
"We must consider the mutual benefits of all relevant parties, be they industry, planters or particularly consumers. For the sake of fairness, I'm thinking of borrowing the measure about to be applied to liquefied natural gas (LPG)," he said.
Mr. Chaiwuti said the present domestic price cap seems to benefit mostly the industrial sector, the largest sugar user in the country.
To prevent a domestic price float from affecting households, separate systems for industry and consumers may be considered, similar to the plan for LPG.
The government will float the LPG price for the industrial sector in July while continuing to cap it for the transport and household sectors in line with the Pracha Wiwat scheme. A preliminary study by the Cane and Sugar Board showed sugar prices would likely move within a range of 15-28 baht a kilogram if they are floated in keeping with global prices. Sugar now goes for 22-23 baht/kg in Thailand, two or three times lower than in neighbouring countries, which has led to a long-standing smuggling problem.
Local beverage producers are pressing the government hard to reduce sugar prices by five baht/kg and allow them to raise their prices to reflect their actual production costs.
The Samak Sundaravej government in 2008 approved a five-baht increase in sugar prices to help cane farmers repay their debts, as the price increase went to the fund.
Kasikorn Research Center said the five-baht levy hiked the cost of beverage production by 3.5 percent. Sugar accounts for 10-12 percent of the production costs.
However, Mr. Chaiwuti discounted the possibility of cutting or scrapping the levy as well as the proposal to float local sugar prices, saying sugarcane planters and millers would reap the benefits from selling sugar at global prices, while general consumers would suffer.
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