Drink firms seek cheaper sugar

They earlier submitted the proposal to the Office of the Cane and Sugar Board during the tenure of Mingkwan's predecessor, Suwit Khunkitti, but their request was rejected.

Paiboon Ponsuwanna, chairman of the Food Processing Industry Club under the Federation of Thai Industries, said last week that they would resubmit the proposal as a short-term solution to relieve the burden on their production costs.

"Those processed-food manufacturers who use sugar as their main raw material will gain a very low margin this year, even though their sales will increase," he said.

Representatives from major soft drink and diary-product companies such as Vitamilk and Coca-Cola will lead the delegation that will meet Mingkwan.

Although the price of sugar has been higher for nearly four months, the companies argue that is not easy for them to adjust their final prices accordingly because of tough global competition, Paiboon said.

Local manufacturers will lose their competitiveness because their rivals can buy exported Thai sugar, which is more than Bt5 per kilo cheaper than domestic-quota sugar, he added.

However, an Industry Ministry source said the proposal would be difficult to accept, as it would radically affect the ministry's plan to repay debt to the Bank of Agriculture and Agricultural Cooperatives.

"If we allow them to use sugar from the export quota, it will effect the sale of sugar from the domestic quota. We would then be unable to reduce our debts to the BAAC. Cane-farmers and sugar-manufacturers should be against this proposal, too," he said.

The Commerce Ministry did allow the retail prices of soft drinks and diary products to rise by Bt1 per unit last month. The move was expected to relieve the burden on manufacturers faced with higher raw-material costs for items such as sugar and metal cans.