Sugar cane farmers dispute government’s 2 baht price hike

Sugar cane farmers in Thailand are seeking clarification from the industry and commerce ministries regarding the Cabinet’s decision to allow a mere 2-baht increase per kilogramme in ex-factory sugar prices. The decision has been deemed unfair by sugar manufacturers as it falls short of the four-baht price hike requested by the Cane and Sugar Board.

Citing escalating manufacturing costs due to drought-induced rise in cane prices, the Board’s proposed increase was set to come into effect from October 28.

The government, however, approved only half of the proposed increase, to align with the increased production costs. An additional 2-baht rise for the Cane and Sugar Fund, intended for environmental purposes, was rejected. The official stance was that consumers should not shoulder the burden of this additional hike.

Narathip Anantasuk, head of the Thailand Sugarcane Planters Federation, voiced the industry’s concerns.

“We are unsure whether authorities are considering having sugar factories carry this burden instead. That’s why we have to meet them.”

Narathip added that shouldering the burden would not be an easy task for the factories.

A manufacturer, speaking anonymously on behalf of three sugar factory associations, opposed this proposal and sought assistance from 57 sugar factories. The manufacturer highlighted the already slim profit margins of the sugar industry, averaging 3% to 4%, and the expected revenue of 5 billion baht from sales in the 2023 to 2024 crop year.

The manufacturer also raised concerns about the environmental impact of sugar cane farming.

“Some factories are spending money to encourage farmers to cut fresh sugar cane to reduce PM2.5 ultra-fine dust. It’s unfair if they have to pay more.”

They also questioned whether other farming sectors using slash-and-burn methods contribute to environmental protection funds or efforts to curb PM2.5 levels.

Sugar prices globally are on the rise. In Thailand, sugar is sold at 27 baht a kilogramme, a price significantly lower than in neighbouring countries where it ranges from 30 to 40 baht a kilogramme. This price disparity is suspected to be the cause of sugar smuggling abroad, reported Bangkok Post.

The sugar cane farmers also plan to seek clarification on the government’s pledge to provide an incentive of 120 baht a tonne to farmers who cut fresh sugar cane without resorting to burning.