Cabinet approves 2-baht increase in sugar price
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Cabinet approves 2-baht increase in sugar price

The cabinet yesterday approved a two-baht increase in the domestic sugar price to better align with higher production costs.

However, the panel blocked another two-baht increase for the Cane and Sugar Fund, targeted for environmental purposes, as it said consumers should not bear the burden of this cost.

Speaking after the weekly cabinet meeting, Commerce Minister Phumtham Wechayachai said the increase is effective immediately.

"The cabinet meeting received input from a meeting with sugar cane and sugar farmers and millers, the Agriculture and Cooperatives Ministry, the Commerce Ministry, and the heads of the Internal Trade Department, the Foreign Trade Department and the Trade Negotiations Department," said Mr Phumtham.

"We must take into account the production costs of cane farmers. The cabinet sees it as imperative to raise the sugar price by two baht, in accordance with higher production costs."

In a related development, the Central Committee on the Prices of Goods and Services yesterday approved adjusting the ex-factory sugar prices of granulated sugar to 21 baht per kilogramme, from 19 baht, and raising refined sugar prices to 22 baht, from 20 baht per kg.

This adjustment was made in line with the higher production cost structure proposed by the Office of the Cane and Sugar Board.

Regarding retail prices, Chakra Yodmani, deputy director-general of the Internal Trade Department, said a resolution was passed to revoke the controlled prices for sugar as retail traders in different areas may have varying costs.

However, retail prices must align with the actual costs. The commerce permanent secretary instructed the Internal Trade Department and provincial commerce offices to ensure there are no unjustified increases in retail prices, closely monitoring the situation.

For retail refined sugar sold in hypermarkets and convenience stores, the retail prices can be raised to 26-27 baht per kg, up from the previous range of 24-25 baht per kg.

The committee also agreed to cancel the measures tightening sugar exports that required shippers sending more than one tonne of sugar to seek prior approval from the ministry.

A sugar manufacturer who requested anonymity said the two-baht increase in ex-factory sugar prices will not be welcomed by producers, who disagree with the government's attempt to regulate the market.

If authorities are worried about the impact of expensive sugar, they should consider reducing or waiving the sugar tax for 3-6 months to cut living costs for people, the source said.

A sugar tax is imposed on food and beverages, usually produced by large companies. The tax is based on concerns over the health impact of sugar.

"We want to ask the government which industries will benefit from the increase of two baht, rather than four baht, under the price control," the source said.

The source said large food and beverage companies should adjust their businesses and better manage operating costs to compete in the market.

They should think about how to support sugar-cane farming, which supplies the raw material for production, said the source.

Cane farmers and sugar manufacturers are struggling to deal with high production costs, such as fertiliser, energy and labour.

The price regulation will not help the sugar industry nor the public because the government is distorting the market mechanism, the source said.

Piyajit Ruckariyapong, chief executive of beverage manufacturer Sappe Plc, said the rise in sugar prices is an external factor beyond the company's control.

Sugar constitutes about 10-12% of the company's overall production costs, and every 10% increase in sugar prices translates to a 0.5% impact on the cost of goods sold, she said.

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