Rising Sugar prices hurt firms

Due to the sudden increase in the domestic sugar price last week, processed-food manufacturers plan to call on the Office of the  Cane and Sugar Board to allow them to use cheaper sugar in their export quota as a short-term way to relieve the effect on their production costs.

After a meeting yesterday, Paiboon Ponsuwanna, chairman of the Food Processing Industry Club under the Federation of Thai Industries, said the proposal would help manufacturers who produce for export but who did not submit applications to use sugar in the export quota, as well as those whose products are sold domestically.

He said canned-fruit and sweetened condensed milk producers had been hard hit as their sugar costs had increased from 10 per cent to 13 per cent of production costs. Both these manufacturers had also shouldered higher production costs from the steel-price increase of about 20 per cent from the start of the year, as well as the baht's appreciation.

"Our exporters usually receive orders three to six months in advance. They have no time to renegotiate and carry a greater burden from the rapidly surging sugar price amidst the tough global competition," he said.

Meanwhile, local manufacturers are losing their competitiveness because their rivals buy exported Thai sugar, which is cheaper than the domestic product by more than Bt5 per kilogram.

Due to the absence of tariffs under free-trade agreements, as well as lower production costs, local manufacturers would lose their competitiveness to imported products, he explained.

Vice-chairman Visit Limprana said priority would be given to manufacturers who are suffering seriously from higher sugar prices and those such as canned-fruit makers whose production is based on domestic content.

Consideration would also be given to products such as soft drinks.

Secretary-general Pravit Prakitsri said they would rush to negotiate with the OCSB in detail as soon as possible.