Sugar millers have joined up with the Sugar and Sugar Cane Board to provide Bt2 billion to help farmers combat drought and another Bt1 billion for them to buy canecutting tractors.
Prakit Pradipasen, chairman of the Thai Sugar Millers Corporation, said this should improve the quality of sugarcane and likely push the price above Bt1,000 per tonne this year.
"Aside from the foreign exchange rates, quality would determine the price. Sugar millers are ready to help in two main areas - drought and shortage of canecutting labour," Prakit said.
Drought affected the quality of sugarcane during the 2009/2010 harvest. This month, the height of sugarcane stood at 1.2 metres on average compared to 1.5 to 1.7 metres in the same period last year. If rain continues to next month, or if there is a better way to manage drought in some areas, the sugarcane crop could grow another 80 to 100 centimetres.
Under the Bt2 billion drought financing package, 46 sugar millers will provide loans worth no more than Bt500,000 each. Farmers have four years to repay the loan, which needs to be used in stocking up water, digging a well or pond, or on equipment needed for better water management. A special committee will be set up to see if the money is being used correctly.
As for the Bt1billion facility, farmers can either form a group or a cooperative to borrow up to Bt15 million for one tractor with the millers guaranteeing the loan.
"Drought and labour shortage are main problems in the development of the sugar industry, as it affects the yield and sweetness. While these loan facilities will bolster the price of sugarcane, they will also promote the ethanol production industry," Prakit said.