Published on December 16, 2005

The Industry Ministry will decide late next month how to reform sugar production to create incentives for farmers and producers, permanent secretary Chakramon Phasukavanich said yesterday.

Chakramon said if the market opened up, people would be encouraged to produce more. However, supply of domestic sugar is controlled by a restrictive and long-standing government policy on domestic prices.

Chakramon, who is chairman of the Sugar and Sugar Cane Committee, said a study on how to reform the industry was being worked out. The study – which should be finalised late next month – will suggest alternatives to the government on how to reform the industry.

Currently, production is controlled by a profit-sharing system between sugar-cane farmers and sugar factories. Moreover, the government has set domestic prices at a level much lower than global prices. The current system does not encourage farmers to grow sugar, Chakramon said, adding that a number have changed from growing cane to farming cassava.

“If the situation continues, the domestic supply of sugar may not be enough and sugar factories will be forced to close,” he said.

If this happens, Thailand may have to import cane at a price much higher than the current level.

Sugar producer Tossapon Tantiwong said a number of sugar-cane farmers in the Northeast had shifted to cassava because the crop’s price rose to Bt1.70 per kilogram.

“I agree with the government’s plan to open up the sugar industry because the market mechanism will enable farmers to decide what crops to grow,” he said.

Sugar factories have sufficient stock for two weeks of consumption, which is a satisfactory level, said Chakramon.

However, some sugar has been smuggled out of the country because Thai sugar prices are much lower than elsewhere, the official added. – The Nation

Post your comment to this story here