Chakramon Phasukvanich, permanent secretary of the Industry Ministry, said the government should float sugar prices by letting the domestic price move in line with the world market.

"Floating-price management is the best for the sugar industry. Shortages and illegal smuggling will stop immediately if sugar prices are managed by market mechanisms. Consumers will have to shoulder higher prices, but only for a short period," he said. The big gap between domestic and export prices has encouraged traders to make higher profits from exports rather than focusing on local markets. The retail price of sugar on world markets is now higher than Bt20 per kilo, compared with Thailand's controlled price of Bt17.50.

To solve the problem, Commerce Minister Somkid Jatusripitak will call a meeting with concerned government agencies and sugar cane associations to discuss the country's sugar-shortage problem.

Early this month the government let sugar mills increase the factory price by Bt3 per kilogram to Bt16.25. In addition, the retail price, including value-added tax, also increased from Bt14.25 to Bt17.50. But the price increases have failed to solve the market problems.

Chakramon said that the ministry would support the government crackdown on illegal smuggling by sending officials to closely monitor sugar mills for any suspicious product movements.

He pointed out that the Customs Department has reported low levels of illegal exports, but that is because it is impossible for the department to know about every illegal export tactic such as the use of fishing boats to Indonesia or the cross-border trade in some provinces.

Petchanet Pratruangkrai

The Nation