The whole sugar industry needs to rely more on the bio-economy to earn extra revenue as sugar consumption looks set to fall by 10% during the pandemic, worse than the domestic demand drop earlier estimated by the government.
The Thai Sugar Millers Corporation (TSMC) public relations working group recently unveiled their dim outlook for sugar businesses, believing total sugar consumption will stand only at 2.25 million tonnes in the 2019-20 crop year, compared with 2.5 million tonnes estimated by the Office of the Cane and Sugar Board in the same period from last October to September this year.
Sluggish global consumption is attributed to the severe economic impact from the pandemic. Global consumption usually grows by 2% a year.
Deputy TSMC board chairman Siriwut Siempakdi urged farmers and millers to not only depend on their core businesses, but also consider more seriously the development of sugar cane, sugar and even waste from manufacturing processes into new products.
This is one way to survive during great uncertainty from lower output caused by drought and the drop in global sugar prices after Brazil, the world's largest sugar seller, increased exports.
The bio-economy, which is driven by the use of renewable resources as raw materials to produce energy, food and other value-added products, will be the new source of revenue, Mr Siriwut said.
The government is promoting bio-economy as it wants Thailand to become a hub for ethanol production, he said.
Ethanol, made from molasses, is used to blend with gasoline while bagasse, the dry pulp residue from sugar cane, can be sold as fuel to power plants.
Other materials from the sugar industry can be also used to develop pharmaceutical and biochemical products.
Mr Siriwut expects sugar cane output sent to sugar mills in the 2020-21 crop year will be close to 75 million tonnes during this drought-hit season.
Thailand and India, the second and third largest sugar exporters, are estimated to produce less sugar this year. This should increase global prices, but Brazil reduced its ethanol production due to lower oil prices and the pandemic and produced more sugar instead, he said.
Sugar prices in the world market are quoted at 11-12 cents per pound, a drop from an earlier estimate of 15 cents.