The cabinet yesterday approved the regulation of sugar prices to mitigate the impact on consumers, while Commerce Minister Phumtham Wechayachai insisted these measures are unlikely to provoke objections from Brazil.
Speaking after the weekly cabinet meeting yesterday, Mr Phumtham said the cabinet endorsed capping the ex-factory prices for granulated sugar at 19 baht per kilogramme and refined sugar prices at 20 baht per kg, while tightening sugar exports.
Exporters shipping out more than one tonne of sugar must seek prior approval from the ministry.
The cabinet's approval overruled the Cane and Sugar Board's announcement last Friday that it was raising ex-factory sugar prices by 4 baht per kg, effective from Oct 28.
The board cited higher production costs for manufacturers as cane prices rose because of the drought.
The 4-baht increase was going to consist of a 2-baht hike for higher production costs and a 2-baht increase for the Cane and Sugar Fund, pushing retail prices higher.
The current ex-factory price for granulated sugar is 19 baht per kg, and refined sugar prices are quoted at 20 baht per kg.
The retail price of granulated sugar is 24 baht per kg, while the price of refined sugar is quoted at 25 baht per kg.
Mr Phumtham said Brazil is unlikely to have a dispute with Thailand over reclassifying raw sugar as a controlled product, as the Thai government is merely helping domestic consumers.
In the past, when global sugar prices were relatively low, Thailand sold domestically at higher rates and exported sugar at relatively cheap prices. This caused Brazil to feel Thailand had provided subsidies to sugar exporters, he said.
However, global market prices are now significantly higher than domestic rates, meaning Brazil is unlikely to have a complaint, said Mr Phumtham.
He said the ministry's decision to propose reinstating sugar as a controlled product is the result of public complaints about a sudden four-baht increase in domestic sugar prices, which directly affects consumers.
When the sugar price surged by four baht, it had a significant impact on several related industries, said Mr Phumtham.
"The current government policy is to cap the prices of some products to ease living expenses for the public," he said.