Thai sugar exports could face delays next year, producers and sellers say, after the government introduced new measures to protect domestic supply and prevent smuggling.
Thailand, the world’s largest sugar exporter after Brazil, last week classified sugar as a controlled good, requiring government approval for exports of over one tonne, a measure some traders said could slow down deliveries.
“The premium of Thai sugar is that buyers get quality products on time,” Rathavudh Saetang, assistant marketing manager of the exporter Khonburi Sugar, told Reuters.
“This reduces our premium and impacts the confidence of overseas buyers.”
The country’s sugar output has been hit by drought, and is now forecast to reach 8 million tonnes, of which 2.5 million will be consumed domestically and 5.5 million exported, government data shows. Last year, the country exported 7.69 million tonnes of sugar.
Local white sugar is 19 baht per kilogramme and refined white sugar is 20 baht per kilogramme. World white sugar prices are at a 12-year high with the December contract trading at $772.90 a tonne on the Intercontinental Exchange (ICE).
The government reversed a domestic price hike of 20% per kilogramme days after it was approved, trying to balance the interest of sugar cane farmers who have been also been hit by higher costs, but have not been able to increase local prices.
Sugar manufacturers earlier this month warned the government against violating World Trade Organization (WTO) rules on free competition in the sugar trade, following the controversial decision to block the price increase.
“The measures (so far) have reduced the income of sugar cane farmers and affect the whole industry — if prices are not good then who will grow sugarcane?” asked Rangsit Hiangrat, director-general of Thai Sugar Millers Corp.
The government has said it would introduce measures to support sugar cane farmers.
Thailand may be dragged into another dispute with major sugar producers and exporters such as Brazil, which previously filed a complaint with the WTO over Thai government measures to subsidise cane farming and sugar manufacturing, putting other sellers in the global market at a disadvantage.
In 2018, the Prayut Chan-o-cha government ultimately relented and agreed to let sugar prices be determined by the market.