Authorities will act to prevent the possibility of a sugar shortage amid concern that speculation will increase and lead households to stockpile sugar.
There is potential for a shortage because of "fake demand" spurred by speculation at a time of high world prices for the commodity, according to Prasert Tapaneeyangkul, the secretary-general of the Office of the Cane and Sugar Board (OCSB).
Global sugar prices are currently at a 28-year high because of shortages resulting from adverse weather and poor cane harvests in some producing countries. But Mr Prasert says speculation by some traders is also driving consumers to hoard goods.
"If the panic escalates and leads to more stockpiling and shortages on store shelves, we will urge wholesalers to accelerate their shipments to retail stores as a primary solution to fill the shelves,"he said.
If stepped-up shipments fail to trim the shortage, the OCSB will act to make more sugar available for the domestic market.
Normally, sugar from mills is required to be delivered to wholesalers for storage within 15 days, but shippers can ask for extensions if they face trouble with transport or poor weather, Mr Prasert said.
If some wholesalers attempt to delay shipments to feed speculation, their requests would be refused, he said.
"If these measures still fail to improve the situation, we will ask sugar millers to start their crushing season faster," he said.
The cane crushing season normally starts in late November with the first lot of sugar produced in early December.
At present, nearly 500,000 tonnes of domestic sugar are yet to be disbursed from mills. Officials estimate that 401,500 tonnes of sugar are needed until the first lot of sugar from the 2009-10 harvest season is produced.
The OCSB is preparing to add the remaining one million tonnes of sugar from the export quota to the domestic quota ease a local shortage if necessary.
Mr Prasert said the OCSB's role was to monitor sugar production for domestic sufficiency, along with storage and distribution from mills to the market. Other aspects of market regulation are the job of the Internal Trade Department at the Commerce Ministry.
Tuesday, September 15, 2009
Monday, September 14, 2009
Sugar miller expands capacity
Thai Roong Ruang Group, the country's second-biggest sugar miller, has expanded capacity because it expects its exports to rise 10% in 2010, helped by a revival in demand from India, said executive director Utai Asdatorn.
The company is forecasting exports of nearly 1 million tonnes in 2010, up from about 890,000 tonnes expected this year, he said.
"We have expanded our capacity as we see a bigger crop and strong demand,"he said."Soaring world sugar prices have encouraged millers to produce more sugar and that means farmers are growing more cane."
The New York raw sugar contract for October delivery, the global benchmark,settled at 20.99 US cents a pound on Wednesday after hitting a 28-year high last week at 24.85 cents.
In the current 2009-10 crop, Thailand,Asia's biggest sugar exporter is forecast to produce about 7.6 million tonnes from about 72-76 million tonnes of cane. The 2009-10 crushing season will start in November and end in April.
Thai Roong Ruang, which runs seven sugar mills, is one of five big Thai millers to have expanded capacity to meet rising global demand. After the expansion, it is likely to produce 1.4 million tonnes of sugar in 2009-10, up from 1.2 million tonnes in the previous crop.
Mr Utai said the company had contracted to sell around 50% of its 2009-10 production in advance through international trading houses.
"We sell mostly to our traditional customers in Asia and the Middle East. How-ever, we expect to sell more sugar to India next year," he said.
India, the world's biggest sugar consumer, has been largely absent from the Thai market for several years but tight domestic supply has forced it to import more, the main factor behind the rise in world prices in recent months.
It is expected to import around 4 million tonnes of sugar in the 2009-10 crop year due to a fall in domestic cane production caused by a poor monsoon.
Mr Utai said he expected Thai sugar production to rise gradually over the next few years as the world sugar deficit encouraged farmers to growmore cane.
The London-based International Sugar Organisation has forecast a global sugar deficit of 8.4 million tonnes in 2009-10.
The company is forecasting exports of nearly 1 million tonnes in 2010, up from about 890,000 tonnes expected this year, he said.
"We have expanded our capacity as we see a bigger crop and strong demand,"he said."Soaring world sugar prices have encouraged millers to produce more sugar and that means farmers are growing more cane."
The New York raw sugar contract for October delivery, the global benchmark,settled at 20.99 US cents a pound on Wednesday after hitting a 28-year high last week at 24.85 cents.
In the current 2009-10 crop, Thailand,Asia's biggest sugar exporter is forecast to produce about 7.6 million tonnes from about 72-76 million tonnes of cane. The 2009-10 crushing season will start in November and end in April.
Thai Roong Ruang, which runs seven sugar mills, is one of five big Thai millers to have expanded capacity to meet rising global demand. After the expansion, it is likely to produce 1.4 million tonnes of sugar in 2009-10, up from 1.2 million tonnes in the previous crop.
Mr Utai said the company had contracted to sell around 50% of its 2009-10 production in advance through international trading houses.
"We sell mostly to our traditional customers in Asia and the Middle East. How-ever, we expect to sell more sugar to India next year," he said.
India, the world's biggest sugar consumer, has been largely absent from the Thai market for several years but tight domestic supply has forced it to import more, the main factor behind the rise in world prices in recent months.
It is expected to import around 4 million tonnes of sugar in the 2009-10 crop year due to a fall in domestic cane production caused by a poor monsoon.
Mr Utai said he expected Thai sugar production to rise gradually over the next few years as the world sugar deficit encouraged farmers to growmore cane.
The London-based International Sugar Organisation has forecast a global sugar deficit of 8.4 million tonnes in 2009-10.
Friday, September 11, 2009
SUGAR PRICES TO BE PUT UNDER STRINGENT CONTROL
The Internal Trade Department is launching urgent measures to control the price of sugar nationwide and stop the hoarding of the commodity by people speculating on the price.
After meeting yesterday with sugar wholesalers and millers to tackle the nationwide sugar shortage, Yanyong Phuangrach, the department's director-general, said governing bodies at 62 provinces would be told to introduce price-control measures. The price-control measures have already been implemented in 14 provinces, including Bangkok.
The department plans to send a team of officials to inspect warehouses across the country and punish any traders found hoarding sugar.
Yanyong added that retailers and wholesalers have complained that sugar manufacturers were affecting their business. The press was not allowed to sit in on the meeting between the Internal Trade Department and sugar traders, because they feared influential producers would cause trouble.
"Traders said that some sugar producers cut their supply over the past month, while some retailers were forced to pay tea money to maintain their supply," Yanyong said.
As a result, sugar prices have jumped from Bt10 to Bt50 per 50-kilogram sack, he said.
The meeting also reported that rising sugar prices in the world market has also encouraged some sugar plants to export quota Gor (A) sugar, which is reserved specifically for domestic consumption, causing a significant shortage in the country.
The average price of sugar in the world market is quoted at between Bt32 and Bt35 per kg, while domestic retail price is quoted at Bt23.50/kg. Should manufacturers choose to export the sugar, they get to make Bt10 per kilogram.
The department, in cooperation with the Industry Ministry and other involved agencies, will try to efficiently manage the 5.7-million-kilogram stockpile of sugar.
Yanyong said the government would encourage producers to gradually release these stockpiles every week to ensure enough supply. It will also seek measures to stop manufacturers from exporting quota Gor (A) sugar.
Meanwhile, Prakit Pradipasen, chairman of the Thai Sugar Millers Corporation, said its 46 members had never asked for bribes from wholesalers or retailers.
He also insisted that no manufacturers had smuggled sugar out of the country because controls along the border were far too stringent.
To ease the domestic shortage, the corporation also agreed to delay the export of quota Kor (C) sugar, which is normally reserved for export. Millers will also make moves to inject more sugar into the market if necessary, he added.
After meeting yesterday with sugar wholesalers and millers to tackle the nationwide sugar shortage, Yanyong Phuangrach, the department's director-general, said governing bodies at 62 provinces would be told to introduce price-control measures. The price-control measures have already been implemented in 14 provinces, including Bangkok.
The department plans to send a team of officials to inspect warehouses across the country and punish any traders found hoarding sugar.
Yanyong added that retailers and wholesalers have complained that sugar manufacturers were affecting their business. The press was not allowed to sit in on the meeting between the Internal Trade Department and sugar traders, because they feared influential producers would cause trouble.
"Traders said that some sugar producers cut their supply over the past month, while some retailers were forced to pay tea money to maintain their supply," Yanyong said.
As a result, sugar prices have jumped from Bt10 to Bt50 per 50-kilogram sack, he said.
The meeting also reported that rising sugar prices in the world market has also encouraged some sugar plants to export quota Gor (A) sugar, which is reserved specifically for domestic consumption, causing a significant shortage in the country.
The average price of sugar in the world market is quoted at between Bt32 and Bt35 per kg, while domestic retail price is quoted at Bt23.50/kg. Should manufacturers choose to export the sugar, they get to make Bt10 per kilogram.
The department, in cooperation with the Industry Ministry and other involved agencies, will try to efficiently manage the 5.7-million-kilogram stockpile of sugar.
Yanyong said the government would encourage producers to gradually release these stockpiles every week to ensure enough supply. It will also seek measures to stop manufacturers from exporting quota Gor (A) sugar.
Meanwhile, Prakit Pradipasen, chairman of the Thai Sugar Millers Corporation, said its 46 members had never asked for bribes from wholesalers or retailers.
He also insisted that no manufacturers had smuggled sugar out of the country because controls along the border were far too stringent.
To ease the domestic shortage, the corporation also agreed to delay the export of quota Kor (C) sugar, which is normally reserved for export. Millers will also make moves to inject more sugar into the market if necessary, he added.
Thursday, September 3, 2009
Dept keeps close watch for malpractice as sugar prices spiral
With world sugar prices aiming for the moon, the Internal Trade Department has had to keep a close eye on domestic retail prices to prevent scalping, hoarding or smuggling.
Dircetor-general Yanyong Puangrach said yesterday that department aimed to ensure that there would be enough sugar for consumption in the country.
Global sugar prices how are skyrocketing. White sugar at the port of London was traded as high as the equivalent of Bt32 per kilogram with transport cost and Bt19 without transport cost.
Domestic sugar prices are now much lower. Pure white sugar sells for Bt23.60 per kilogram, grade 1 and 2 sugar for Bt22.60 and brown sugar for Bt22.10.
This price gap i attractive to smugglers, who can reap profits from selling cheap Thai sugar to cross-border markets.
This might also cause retailers to sell sugar over the maximum price set by the department, without seeking an allowance.
To deal with the problem of smuggling, the department would ask for approval from Commerce Minister Porntiva Nakasai to issue stricter rules for retail sugar prices.
In case sugar is found selling over its ceiling price or smuggled out, the department can ask the central committee on goods and services to have manufacturers declare their sugar stocks.
The authorities can also issue an announcement to manufactures, prohibiting them from moving their sugar.
Retailers selling over-priced sugar could face imprisonment for seven years and a fine of Bt140,000. If they refuse to sell to customers, they could be jailed for five years or fined Bt100,000, or both.
"Now, the domestic sugar supply is not considered in shortage," Yanyong said.
The sugar quota for domestic consumption in the first eight months was 19 million tonnes, while 13 million tonnes were consumed.
"It's believed that the four million tonnes of sugar remaining will be enough for the rest of this year, or four months," he added.
Dircetor-general Yanyong Puangrach said yesterday that department aimed to ensure that there would be enough sugar for consumption in the country.
Global sugar prices how are skyrocketing. White sugar at the port of London was traded as high as the equivalent of Bt32 per kilogram with transport cost and Bt19 without transport cost.
Domestic sugar prices are now much lower. Pure white sugar sells for Bt23.60 per kilogram, grade 1 and 2 sugar for Bt22.60 and brown sugar for Bt22.10.
This price gap i attractive to smugglers, who can reap profits from selling cheap Thai sugar to cross-border markets.
This might also cause retailers to sell sugar over the maximum price set by the department, without seeking an allowance.
To deal with the problem of smuggling, the department would ask for approval from Commerce Minister Porntiva Nakasai to issue stricter rules for retail sugar prices.
In case sugar is found selling over its ceiling price or smuggled out, the department can ask the central committee on goods and services to have manufacturers declare their sugar stocks.
The authorities can also issue an announcement to manufactures, prohibiting them from moving their sugar.
Retailers selling over-priced sugar could face imprisonment for seven years and a fine of Bt140,000. If they refuse to sell to customers, they could be jailed for five years or fined Bt100,000, or both.
"Now, the domestic sugar supply is not considered in shortage," Yanyong said.
The sugar quota for domestic consumption in the first eight months was 19 million tonnes, while 13 million tonnes were consumed.
"It's believed that the four million tonnes of sugar remaining will be enough for the rest of this year, or four months," he added.
Sweetener for industrial sugar users
Industrial sugar users will gain access to the cheaper domestic sugar quota if export prices surge above local ones,the Office of the Cane and Sugar Board (OCSB) has pledged.
Food and beverage manufacturers for the export market normally purchase sugar from the export quota, which his-torically has been priced lower than domestic sugar. However, world sugar prices have been surging this year because of a global supply shortfall.
The ex-factory price of white sugar is now at 20 baht per kilogramme, about two baht more than the export sugar price.
Prasert Tapaneeyangkul, the OCSB secretary-general, said industrial users now using the export quota could seek domestic sugar if export prices become more expensive.
This year, about 1.9 million tonnes of sugar are reserved for domestic con-sumption, with 63% for household usage and 37% for industrial users who serve the local market.
"We also have a surplus of about 590,000 tonnes left from last year's allocation for domestic sale that should be enough to accommodate food and beverage exporters' demand," Mr Prasert said.
Exporters have filed requests for 370,000 tonnes of export sugar this year.While 57% have already exercised their rights, the remaining 43% may or may not use their allocated quotas if export sugar becomes more expensive.
However, operators who shift to use the domestic quota will lose their right to seek export sugar next year.
"If exporters shift to use domestic sugar, the Cane and Sugar Fund, cane farmers and sugar millers could also enjoy better income," Mr Prasert said.
More usage of domestic sugar means a higher multiplier to value-added tax collection, which goes to pay down the debt of the fund, now at 20 billion baht.
The shift would also raise export sugar supply. With global prices at a 28-year high and likely to rise further, the higher revenue in the export market will also increase farmers' and millers' incomes.
Surat Thadachawasakul, the general manager of the Thailand Cane and Sugar Corporation (TCSC), which oversees sugar for export, said export prices were likely to keep rising.
"The latest reports indicate that the world sugar deficit may be wider than earlier forecast," he said.
"Brazil, the world's largest sugar producer, is expecting to deliver less than forecast to the world market while India,the world's largest sugar consumer, is expected to require more export sugar from a previously forecast shortage."
Food and beverage manufacturers for the export market normally purchase sugar from the export quota, which his-torically has been priced lower than domestic sugar. However, world sugar prices have been surging this year because of a global supply shortfall.
The ex-factory price of white sugar is now at 20 baht per kilogramme, about two baht more than the export sugar price.
Prasert Tapaneeyangkul, the OCSB secretary-general, said industrial users now using the export quota could seek domestic sugar if export prices become more expensive.
This year, about 1.9 million tonnes of sugar are reserved for domestic con-sumption, with 63% for household usage and 37% for industrial users who serve the local market.
"We also have a surplus of about 590,000 tonnes left from last year's allocation for domestic sale that should be enough to accommodate food and beverage exporters' demand," Mr Prasert said.
Exporters have filed requests for 370,000 tonnes of export sugar this year.While 57% have already exercised their rights, the remaining 43% may or may not use their allocated quotas if export sugar becomes more expensive.
However, operators who shift to use the domestic quota will lose their right to seek export sugar next year.
"If exporters shift to use domestic sugar, the Cane and Sugar Fund, cane farmers and sugar millers could also enjoy better income," Mr Prasert said.
More usage of domestic sugar means a higher multiplier to value-added tax collection, which goes to pay down the debt of the fund, now at 20 billion baht.
The shift would also raise export sugar supply. With global prices at a 28-year high and likely to rise further, the higher revenue in the export market will also increase farmers' and millers' incomes.
Surat Thadachawasakul, the general manager of the Thailand Cane and Sugar Corporation (TCSC), which oversees sugar for export, said export prices were likely to keep rising.
"The latest reports indicate that the world sugar deficit may be wider than earlier forecast," he said.
"Brazil, the world's largest sugar producer, is expecting to deliver less than forecast to the world market while India,the world's largest sugar consumer, is expected to require more export sugar from a previously forecast shortage."
Commissioner not shaken by salt plant row
The National Human Rights Commission is launching an investigation into one of its own commissioners accused of community rights violations involving a salt processing plant.
Angry villagers allege Prinya Sirisarakarn ran a salt plant in Nakhon Ratchasima province which was contributing to the degradation of their farmland.
Mr Prinya, however, insists he has done no wrong.
A network of 14 grass-roots groups in the northeastern provinces submitted a petition to the commission demanding its chair, Amara Pongsapich,look into Mr Prinya's qualifications.They say the plant at Non Thai district had a severe impact on hundreds of villagers and the environment.
The villagers claim the operation was one of eight salt processing plants in the area that contaminated water sources and soil, making the land unsuitable for growing crops.
An earlier NHRC investigated the case and found the eight plants' operations should be suspended. However,Mr Prinya continued to run his salt business, the complaint said. He was not yet a commissioner at that time.
The NHRC chair yesterday said she would invite Mr Prinya for questioning and collect information about efforts the plant was making to reduce its impact on the environment.
Ms Amara did not say when the inquiry would be completed.
"As far as I know, Mr Prinya has nothing to do with the salt mining activities," she said.
The conflict between the salt mining and salt boiling plant operators and farmers has raged for several years.The previous NHRC investigated the matter and came up with conflict resolution measures.
Ms Amara said her team would investigate whether all the parties had followed those measures.
Mr Prinya was not available for comment yesterday. However, he earlier told the villagers he no longer had a role in managing the salt processing plant and hadassigned someoneelse to take charge.
He said he was ready to be investigated and insisted he was qualified to sit on the human rights body.
Supakit Boon-anek, a representative of the villagers affected by salt mining and processing activities, said Mr Prinya was not suitable to be a human rights commissioner because he was involved in a business that affected human rights.
The allegations put more pressure on the seven-member NHRC, which took office on June 25. Civil groups and legal experts have criticised the nomination and selection of the NHRC members, saying it lacked public participation.
Angry villagers allege Prinya Sirisarakarn ran a salt plant in Nakhon Ratchasima province which was contributing to the degradation of their farmland.
Mr Prinya, however, insists he has done no wrong.
A network of 14 grass-roots groups in the northeastern provinces submitted a petition to the commission demanding its chair, Amara Pongsapich,look into Mr Prinya's qualifications.They say the plant at Non Thai district had a severe impact on hundreds of villagers and the environment.
The villagers claim the operation was one of eight salt processing plants in the area that contaminated water sources and soil, making the land unsuitable for growing crops.
An earlier NHRC investigated the case and found the eight plants' operations should be suspended. However,Mr Prinya continued to run his salt business, the complaint said. He was not yet a commissioner at that time.
The NHRC chair yesterday said she would invite Mr Prinya for questioning and collect information about efforts the plant was making to reduce its impact on the environment.
Ms Amara did not say when the inquiry would be completed.
"As far as I know, Mr Prinya has nothing to do with the salt mining activities," she said.
The conflict between the salt mining and salt boiling plant operators and farmers has raged for several years.The previous NHRC investigated the matter and came up with conflict resolution measures.
Ms Amara said her team would investigate whether all the parties had followed those measures.
Mr Prinya was not available for comment yesterday. However, he earlier told the villagers he no longer had a role in managing the salt processing plant and hadassigned someoneelse to take charge.
He said he was ready to be investigated and insisted he was qualified to sit on the human rights body.
Supakit Boon-anek, a representative of the villagers affected by salt mining and processing activities, said Mr Prinya was not suitable to be a human rights commissioner because he was involved in a business that affected human rights.
The allegations put more pressure on the seven-member NHRC, which took office on June 25. Civil groups and legal experts have criticised the nomination and selection of the NHRC members, saying it lacked public participation.
Monday, August 31, 2009
SUPPLY SLUMP SWEETENS POTENTIAL FOR THAI EXPORTS
The price of sugar has risen to its highest level in 28 years due mainly to severe drought in many countries particularly India, which has resulted in shortage of supply in the global market.
Thai Sugar Millers Corporation (TSMC) said yesterday that the primary price of sugar cane for the new crop will hit Bt1,150 per tonne, which is the highest since 1982.
Prakit Pradipasen, chairman of TSMC, said the price will remain at these levels with increasing demand in the world market.
He added that sugar price in the world market had increased by 20 cent per pound due to decline in sugar production in many countries following drought.
"Sugar-price trading in the futures market has skyrocketed 24.78 per cent per pound in March 2010. If the price keeps rising, the final price of sugar cane should be higher than the estimated primary price of sugar cane of Bt950 per tonne for the harvesting season 2009/10," said Prasert Tapaneeyangkul, secretary-general of the Office of Cane and Sugarcane Board (OCSB).
If the final price of sugar cane is higher than the primary price, sugar manufacturers will need to pay the additional amount to sugar-cane growers for that season.
The primary price of sugar cane in 2008/09 was Bt830 per tonne, while the final price was forecast to be around Bt860 per tonne, he said.
He is confident the price of sugar cane in 2009/10 will be higher than last season, which should be higher than Bt980 per tonne.
The main factor pushing up the global sugar price was India, which has shifted from being a sugar exporter to importer because of the drought situation, he said.
"India's sugar stocks have been decreasing, from 9.3 million tonnes last year to 7.5 million tonnes this year. It will further drop to 5 million tonnes in 2010," he said.
The Indian Sugar Mills Association has estimated that sugar output in India would reach 19 million tonnes next year from 14.7 million tonnes this year.
However, it is believed that sugar production would be only 16 million tonnes next year because of poor sugar cane species and the impact of climate change.
India currently consumes around 22 million tonnes of sugar each year, which has tended to increase following the economic recovery and its huge population.
Vibul Panitvong, executive chairman of Thai Sugar Millers Corporation, said the price of sugar cane could rise to Bt1,100 per tonne in the year 2009/2010 due to the skyrocketing price of sugar.
"The higher sugar price will hike the total value of Thailand's sugar exports from US$1.5 billion (Bt51 billion) this year to $2.5 billion in the coming year," he said.
Besides India, he said the world's largest sugar exporter, Brazil, would also not be able to make up the shortage in supply despite boosting its sugar-cane output.
"The higher output will go towards serving 30 new ethanol plants in Brazil. Presently, 57 per cent of total sugar cane output in Brazil is used to produce ethanol, and the rest 43 per cent is used to produce sugar," he said.
Brazil is expected to increase its sugar exports from 31 million tonnes this year to 33 million tonnes next year.
Due to lower sugar export from India and other countries, it will be a good opportunity for Thailand to boost its exports and for local sugar-cane growers who will be able to sell the sugar cane at a better price.
The output of sugar cane in 2009/10 is expected to be around 71.6 million tonnes, up from 66.46 million tonnes in 2008/09 as a result of high rainfall. Consequently, sugar production will increase from 7.19 million tonnes to 7.64 million tonnes. However, Thailand's main obstacle is to improve sugar-cane yield and the structure of benefit sharing.
Vibul said Thai sugar manufacturers have expanded their business to neighbouring countries such as Laos and Cambodia because of limited agricultural areas in Thailand and tariff incentives to export to European Union countries.
He said Thailand's subsidy system has created price distortions and reduced the overall industry competitiveness.
In 2007, the Cabinet put the development of the sugar-cane industry on the national agenda, to be completed in three years.
"It's shameful that though we proposed an annual budget of Bt1.1 billion for three consecutive years, the government has not approved it at all. Therefore, it is difficult for us to move forward with the projects in the national agenda," Prasert said.
There are five development plans in the national agenda: research and development of cane species, value-added creation of by-products from sugar cane, productivity improvement, alternative energy, and corporate social responsibility.
Thai Sugar Millers Corporation (TSMC) said yesterday that the primary price of sugar cane for the new crop will hit Bt1,150 per tonne, which is the highest since 1982.
Prakit Pradipasen, chairman of TSMC, said the price will remain at these levels with increasing demand in the world market.
He added that sugar price in the world market had increased by 20 cent per pound due to decline in sugar production in many countries following drought.
"Sugar-price trading in the futures market has skyrocketed 24.78 per cent per pound in March 2010. If the price keeps rising, the final price of sugar cane should be higher than the estimated primary price of sugar cane of Bt950 per tonne for the harvesting season 2009/10," said Prasert Tapaneeyangkul, secretary-general of the Office of Cane and Sugarcane Board (OCSB).
If the final price of sugar cane is higher than the primary price, sugar manufacturers will need to pay the additional amount to sugar-cane growers for that season.
The primary price of sugar cane in 2008/09 was Bt830 per tonne, while the final price was forecast to be around Bt860 per tonne, he said.
He is confident the price of sugar cane in 2009/10 will be higher than last season, which should be higher than Bt980 per tonne.
The main factor pushing up the global sugar price was India, which has shifted from being a sugar exporter to importer because of the drought situation, he said.
"India's sugar stocks have been decreasing, from 9.3 million tonnes last year to 7.5 million tonnes this year. It will further drop to 5 million tonnes in 2010," he said.
The Indian Sugar Mills Association has estimated that sugar output in India would reach 19 million tonnes next year from 14.7 million tonnes this year.
However, it is believed that sugar production would be only 16 million tonnes next year because of poor sugar cane species and the impact of climate change.
India currently consumes around 22 million tonnes of sugar each year, which has tended to increase following the economic recovery and its huge population.
Vibul Panitvong, executive chairman of Thai Sugar Millers Corporation, said the price of sugar cane could rise to Bt1,100 per tonne in the year 2009/2010 due to the skyrocketing price of sugar.
"The higher sugar price will hike the total value of Thailand's sugar exports from US$1.5 billion (Bt51 billion) this year to $2.5 billion in the coming year," he said.
Besides India, he said the world's largest sugar exporter, Brazil, would also not be able to make up the shortage in supply despite boosting its sugar-cane output.
"The higher output will go towards serving 30 new ethanol plants in Brazil. Presently, 57 per cent of total sugar cane output in Brazil is used to produce ethanol, and the rest 43 per cent is used to produce sugar," he said.
Brazil is expected to increase its sugar exports from 31 million tonnes this year to 33 million tonnes next year.
Due to lower sugar export from India and other countries, it will be a good opportunity for Thailand to boost its exports and for local sugar-cane growers who will be able to sell the sugar cane at a better price.
The output of sugar cane in 2009/10 is expected to be around 71.6 million tonnes, up from 66.46 million tonnes in 2008/09 as a result of high rainfall. Consequently, sugar production will increase from 7.19 million tonnes to 7.64 million tonnes. However, Thailand's main obstacle is to improve sugar-cane yield and the structure of benefit sharing.
Vibul said Thai sugar manufacturers have expanded their business to neighbouring countries such as Laos and Cambodia because of limited agricultural areas in Thailand and tariff incentives to export to European Union countries.
He said Thailand's subsidy system has created price distortions and reduced the overall industry competitiveness.
In 2007, the Cabinet put the development of the sugar-cane industry on the national agenda, to be completed in three years.
"It's shameful that though we proposed an annual budget of Bt1.1 billion for three consecutive years, the government has not approved it at all. Therefore, it is difficult for us to move forward with the projects in the national agenda," Prasert said.
There are five development plans in the national agenda: research and development of cane species, value-added creation of by-products from sugar cane, productivity improvement, alternative energy, and corporate social responsibility.
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