Thailand govenment raises sugar cane price, stirs industry buzz

The government yesterday sanctioned a definitive sugar cane price for the 2022/2023 season at 1,197 baht (US$33) per tonne, marking a substantial increase of 117 baht from the preliminary price of 1,080 baht per tonne. In parallel, the initial price for the 2023/2024 season was ratified by the cabinet, standing at 1,420 baht per tonne.

Government spokesperson, Chai Wacharonke, indicated that the final prices applied to sugar cane demonstrating a commercial cane sugar (CCS) sweetness level of ten. The CCS value expresses the sweetness of the cane. Higher sugar content translates into larger sugar yields and correspondingly higher CCS.

The Cabinet further implemented a rate of increase/decrease in the sugar cane price, corresponding to 71.85 baht per 1 CCS unit. The revenue for sugar production and distribution was established at 513.23 baht per tonne of processed sugar cane.

Chai revealed that, since the final price approved by the Cabinet exceeds the initial sugar cane prices by 117 per tonne, the sugar mills would be obligated to pay the difference to the growers. Concurrently, a deputy government spokesperson, Kenika Ounjit, relayed that the Cabinet, yesterday, February 20, also approved a document aimed at resolving the dispute regarding sugar under the World Trade Organization (WTO) between Thailand and Brazil. This was proposed by the Commerce Ministry.

Kenika elaborated that the Thai government has been involved in negotiations with Brazil while making significant improvements to the country’s sugar and cane structure, and continuously adjusting relevant laws and regulations over the years. This includes a reduction of subsidy measures, leading Brazil to acknowledge Thailand’s efforts and a settlement was reached in December 2023.

A settlement document was presented by Thailand’s Commerce Ministry, mutually acknowledged by the Thai and Brazilian governments regarding the sugar subsidies issue. The signing is scheduled to take place during the WTO meeting slated for February 27-29 this year.

WTO Brazil dispute

Brazil initially launched the process to address the dispute over Thailand’s sugar subsidies on April 4, 2016. It was argued that Thailand’s support for its sugar and sugar cane industry may not be in line with WTO regulations, negatively affecting Brazil, the world’s top sugar exporter.

Subsequently, both nations engaged in negotiations from 2016 to 2023. Thailand undertook structural adjustments to its sugar cane and sugar industry, such as abolishing the quota system in January 2018 without specifying export quotas and aligning with market mechanisms.

Moreover, Thailand annulled the domestic sugar price setting by amending Section 17 of the Sugar and Cane Act of 1984 and adjusted the support funds previously provided by the state to sugar mills when the final sugar cane price fell below the initial sugar cane price. Consequently, there is no longer government funding support.