Millers concerned over Bt5 price rise

At a press conference yesterday, Thai Sugar Millers Corporation chairman Prakit Pradipasen said that while the Bt5-per-kilogram increase, effective last month, benefited farmers, the move was destabilising the decades-long sugar-pricing structure and higher prices could lead to smuggling and lower consumption.

"Farmers and sugar millers now share revenue in a 70:30 ratio," he said. "But does the increase, to go directly to farmers, mean the 70:30 ratio plus subsidies? We still don't know whether this would violate the World Trade Organisation's regulations on subsidies. How will the Sugar Cane and Sugar Committee handle the ratio once it has got rid of debts?"

He also envisioned that higher sugar prices could prompt industrial users to introduce other sweeteners in their production lines, while consumers would also cut their sugar intake.

The Cabinet approved on April 28 a raise in the ex-factory sugar price of Bt5 per kilo. Based on the stock of 13 million sacks, an extra Bt6.5 billion will be cultivated and all will go to the Sugar Cane and Sugar Committee until it can rid itself of its Bt25-billion debts.

Inclusive of VAT of 35 satang per kilo, refined sugar costs

Bt23.60. Sugar millers at the press conference said that while they received nothing from the resolution, they have to shoulder higher insurance premiums for the sugar in warehouses as the premiums are based on selling prices. They also have to bear a loss of 10 satang per kilo, as the product is sold in a round figure of 50 satang.

It also remains unclear whether the Bt5 sum will be factored into

the calculation of the preliminary sugar-cane price in the next harvest season.

Thai Sugar Millers Corporation president Vibul Panitvong said the Bt5 should be factored into the calculation so that farmers could cover their rising costs of production. He said that would ensure

the stability of sugar-cane production and brighten the prospect of turning sugar and related products into higher-valued items such as ethanol.