Sugar float pushed before single market emerges
Sugar float pushed
As Thai sugar is the cheapest in Asean, millers are repeating their call for the Industry Ministry to float its price to prevent smuggling when the Asean Economic Community (AEC) materialises in late 2015.
In Thailand, white sugar retails at 22.6 baht per kilogramme and white refined sugar 23.6 baht, according to the Thai Sugar Millers Corporation (TSMC).
Data compiled by trade organisations of various countries and Thailand's Office of the Cane and Sugar Board showed the retail prices of white sugar are around 30-33 baht per kg in Laos and Cambodia, 30.01 baht in Myanmar, 25.5-28.5 baht in Vietnam and 25.87 baht in Malaysia.
Refined sugar is sold at 33.95 baht in Indonesia, 40.35 baht in Singapore and 41.2 baht in the Philippines.
Outside Asean, the prices are even higher _ 57.09-77.85 baht in China, 66.9 baht in Japan, 49.5 baht in Korea and 59.75 baht in Australia.
"Millers are concerned price controls will lead to more smuggling, especially once the AEC is established," said TSMC spokesman Sirivuth Siamphakdee.
Sugar supply will likely fall short of domestic consumption, which is allocated at 2.5 million tonnes for the 2013-14 crop season.
"Although Thailand is a major sugar producer with sufficient domestic supply, almost all of the sugar allocated for exports has already been sold in forward contracts. And if domestic sugar is smuggled to other countries, we might face a shortage," said Mr Sirivuth.
The Thailand Development Research Institute (TDRI) was hired by the Cane and Sugar Fund in 2011 to study restructuring Thailand's cane and sugar industry. The study, which was finalised in September 2012, proposed scrapping the domestic price cap in place for three decades.
Although there have already been two cabinet resolutions to implement the TDRI's proposal, reforms by the Industry Ministry have been slow.
While the floating of sugar prices would trim state subsidies, the Cane and Sugar Board prefers a partial float in a set range with the government providing compensation.
Asean countries are not required to float sugar prices once the AEC is established, but a free flow of goods must be allowed, said Viroj NaRanong, TDRI's research director for health, economics and agricultural economics programme.