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CHAPTER 1
Structure of Sugar industry in Thailand
SYNOPSIS
1-2
CHAPTER 1
Structure of Sugar industry in Thailand
1937, a sugar mill was constructed for the first time in Koh Ka District,
Lampang Province. It was called the Lampang Thai Sugar Mill and was equipped with
modern machinery. Construction was completed in 1938. Chicken-leg sugar cane was
used as the raw material for producing sugar but was insufficient to produce sugar, as
this species produces a low percentage of sugar. Insufficient land for planting and low
yield/acre was obtained. Before 1959, Thailand produced lower volumes of sugar than
domestically consumed. We had to import 20,000-50,000 MT. of sugar a year.
Later, another sugar mill was constructed in Uttradit Province. Chicken-leg sugar
cane was again used as the raw material. Again, there was insufficient bagasse fiber to
use as fuel. Wood also had to be used. Heat from the steam machinery caused
burdens. New species of sugar cane for producing sugar was sought during this period.
When the Government promoted the search for new and improved species of
sugar-cane, which produced a high percentage of sugar, there was contemporaneous
technological advancement. This enabled construction of another sugar-mill.
1-3
Later, more sugar mills were constructed and there is now a total of 42 sugar mills.
Sugar produced has exceeded the volume used for domestic consumption, so since
1970 Thailand has been able to export this surplus. Distribution of sugar mills has
extended to Chonburi Province, Rayong, Kanchanaburi, Supanburi, Prachuabkirikan
and Petchburi Provinces.
and there is
1-4
Central Region
sugar-cane in Supanburi,
Rajburi, Nakornpatom, Kanchanaburi,
Petchburi, Angthong, Singburi and
Prachuabkirikan Provinces. These
provinces have recently become the biggest areas
for planting sugar-cane in
Thailand. Presently,
60 % of sugar-cane planted for producing
sugar in Thailand comes from this region.
Eastern Region
Northeastern Region
1-5
Sugar-cane planted in Thailand .
From the 1997 survey, the following species of sugar-cane were planted :
Northern Region
Central Region
Eastern Region
Northeastern Region
sugar-cane
planters
in
Regions prepare soil for planting the new sugar-cane in the early rainy season, between
May and June, so the soil receives moisture from the rain. Moisture in the soil helps the
sugar cane sprout evenly. Another aspect is that the soil after November-February is
hard, making preparation difficult. Farmers have to wait for rainfall before preparing the
soil. In the Eastern Region, planters like to prepare the soil and plant a new crop in
November-December, by using moisture left in the soil from the rainy season. This
makes sugar-cane sprout for a certain period. The age of sugar cane planted during
November-December to the March-May, will be 4-6 months. The coming Rainy season
will enable the sugar cane to root deeply into the soil and grow. The sugar cane will be
strong and can endure dryness when there is a shortage of rain, which may occur
during July-September. Agriculturists in this region regard planting during this period
more suitable than planting in May, as it saves the expense of mowing weeds and it is
easy to find species.
The sugar cane growing period usually about 10-12 months. It is then cut and
transported to the mills. If cut before 10 months, the sweetness will be insufficient. Rain
must stop for about 15-30 days to get high sweetness.
1-6
If sugar-cane is cut while there is still some rain, sweetness will be low. The
Ministry of Industry controls the period for crushing sugar cane by not allowing the mills
to crush before the 1st of November. They can crush until the end of May or June each
year. The production year is different from the calendar year, as the production year
begins in November and ends in October the following year.
Produce of sugar-cane
The volume of sugar cane produced appears to be uncertain.
It changes from
high to low depending upon the price of sugar-cane and climatic conditions. The price
of sugar-cane keeps changing. It the price of sugar-cane is high, sugar-cane planters
will extend the area for planting the following year. When the price falls, the area for
planting is reduced the following year, as seen on Table # 1.1
1-7
Table # 1.1 Planting area, volume of production and buying price of sugar-cane
Year of
Planting area
Volume of
Average price
Production
(acres)
sugar-cane (MT)
(Bath/MT)
1981-1982
441,334
2,195,853
118.22
1982-1983
344,982
1,694,533
119.8
1983-1984
452,000
2,387,185
153.98
1984-1985
532,000
3,912,788
117.87
1985-1986
523,000
3,044,850
102.87
1986-1987
361,379
2,534,660
161.18
1987-1988
447,777
2,379,430
203.65
1988-1989
646,243
4,399,067
150.97
1989-1990
738,583
5,102,268
136.22
1990-1991
861,806
6,585,861
144.9
1991-1992
872,494
5,925,566
150.45
1992-1993
1,133,439
9,512,794
179.72
1993-1994
1,616,304
12,694,491
199.64
1994-1995
1,935,253
13,413,442
298.66
1995-1996
2,347,450
19,099,066
301.8
1996-1997
3,118,689
26,094,453
289.25
1997-1998
3,541,096
18,941,209
299.73
Source : Sugar-cane and Sugar-Office for the years from 1981-82 to 1997-98
1-8
In 1981-1982, the area planted with sugar-cane in Thailand was 441,334 Vai. The
volume of sugar cane fed into mills for pressing was 2,195,853 MT. By 1984-1985, the
area of sugar cane had increased to 532,000 rai.
pressing was 3,912,788 MT. There was surplus sugar on the market, leading to a great
reduction in price of sugar cane and sugar. This impacted on planting in 1986-1987, as
agriculturists began to reduce planting in production year 1987-1988. There was a
shortage of rain, which damaged much of the sugar cane.
After 1987-1988, the planting area of sugar cane was 447,777 rai and volume of
sugar cane for pressing was 2,379,430 MT. In 1990-1991, the area of sugar-cane had
increased to 646,243 rai, while sugar-cane for
pressing
861,806 rai, while sugar-cane for pressing was 6,585,861 MT. From the survey of
sugar-cane made in 1991-1992, the area for planting sugar cane was 872,494 rai, while
5,925,566 MT. was pressed. In 1992-1993, both the area for planting and volume
increased to 1,133,439 rai, while up to 9,512,794 MT of sugar-cane was fed in for
pressing. In 1993-1994, 4 new sugar mills opened for production and the area for
planting sugar-cane increased to 1,616,304 rai. In1994-1995, another 4 sugar mills
opened for production and the area for planting sugar-cane increased to 1,935,253
rai. In 1995-1996, the area for planting sugar-cane increased to 2,347,450 rai. In 19961997, it increased by 770,739 rai to 3,118,689 rai and in 1997-1998, the area for planting
increased to 3,541,096 rai.
Cost price for producing sugar-cane
The present cost price of planting sugar cane is high, as agriculturists still lack
correct technology. Increased production is done by extending the planting area.
Improving production methods or improving the sugar-cane species is rare, despite the
fact that improving planting and produce will give a higher production.
At the same
time, cost price can be reduced. After cutting the sugar-cane, the stumps can grow
and can be cut again up to 3 times: the first from cuttings from newly planted
1-9
sugar-cane; then cuts from the stumps. Cost price of sugar cane in newly planted sugar
cane and stumps/stubs of sugar cane should be considered. Important expenditure in
planting sugar-cane can be classified into: cost of preparing soil; cost of planting
expenses; maintenance costs; and other expenses and expenses in cutting and
transporting sugar-cane. The cost price of stumps/stubs sugar cane of will reduce
planted sugar cane by 40%, as there are no expenses for preparing the soil and
planting sugar cane. Expenses for stumps of sugar cane are maintenance costs, cutting
and transporting costs and other expenses. The cost price for planting sugar cane can
be classified as follows: -
1-10
Table # 1.2 Each item of expense for planting sugar cane, in percentage of the total.
Description
Newly
Stump or stub of
Planted sugar-cane
sugar-cane
10
20
planting of sugar-cane
3. Maintenance costs
25
37
4. Other expenses
15
16
30
47
100
100
sugar-cane
Total
Source : Sugar-cane and Sugar-Office for the years from 1987 to 1998
It will be seen that the cost of cutting and transporting sugar-cane is high
compared with total expenses. The second highest cost is maintenance costs, i.e.
the cost for eliminating weeds, cost of fertilizer, wages of labourers applying fertilizer,
cost of other agricultural tools, etc. This is taken From the study made by the Sugar-cane
1-11
Table #1.3 Details of average cost price for planting sugar-cane in Central and Eastern Regions
during production year 1997-1998
UNIT : BAHT
Newly plant
Stub of
sugar-cane
sugar-cane
(Baht)
(Baht)
300
350
250
300
300
200
200
50
50
100
100
50
50
150
150
Description
1-12
Table #1.3 Details of average cost price for planting sugar-cane in central and Eastern Regions
during production year 1997-1998 (continued)
UNIT : BAHT
Description
Newly plant
Stub of
sugar-cane
sugar-cane
(Baht)
(Baht)
120
120
(1 acre per 7 MT)
280
460
490
2,852
1,640
356.5
234.28
1-13
Generally, newly planted sugar-cane will be 2 parts of the area. The cost price for
new sugar-cane will be 356.50 baht /MT,
2 parts will be
The market for raw material or sugar cane is somewhat of a monopoly, as is the
market for buyers, because after planting sugar cane, it has to be sold to the sugar
mills.
have grouped together to bargain with the sugar mills, the majority of the sugar-cane
agriculturists still depend on the mills for loans for planting. Sugar-cane producers are
obliged to sell their sugar cane to such mills, which monopolize buying. The sellers are
sugar-cane agriculturist who group together, as:
1. Sugar-cane Agriculturists, Zone 7 Association, This involves sugar-cane
planters in Nakornpathom,
Nakornsawan
Agricultural,
Its office is
1-14
Sugar-cane Agriculturist Groups which have established big
groups
with
important roles are Agriculturist Group Zone 7 and Chonburi Agricultural Occupation.
They have important roles in bargaining for the buying price of sugar cane with sugar
mills and contacting Government offices to remedy problems and the constraints of the
sugar-cane plantation business.
There are 2 methods of buying used by the mills:
a) buying sugar cane according to weight. The majority buys by weight. This
long-practiced method weighs the sugar cane, then the price is agreed at 300 baht /MT.
The sugar-cane agriculturists will sell at this price, whatever the type of sugar-cane and
whatever its sweetness. Buying by this method results in low quality products and there
is residue, such as the leaf-sheaves of sugar cane, leaves and soil. Sugar-cane
agriculturists are usually not interested in the quality and sweetness of sugar cane,
because they aim only at growth and weight and ignore improving the quality of sugar
cane.
b) buying sugar cane according to quality. This is "Commercial Cane Sugar
(C.C.S.) bought by considering the quality of the sugar cane. This is can be obtained
from examining and measuring sugar juice, then calculating it by using an international
formula. Buying sugar-cane with this method gives justice to both parties, because the
price is according to the sweetness. When sugar-cane has high sweetness, it is sold at
a high price and encourages the sugar-cane agriculturists' interest in improving sugar
cane species, as well as cutting the sugar-cane when it is sufficiently mature to
obtain a good price. Buying through this method is usually done by state enterprise
mills. Of the private mills, only the Mahakhun Sugar Mill in Singburi Province buys sugar
cane through this formula.
1-15
The price of sugar cane moves up and down according to world market prices. If
the price of sugar in the world market moves higher, the mills are glad to buy sugar
cane at a high price, but when the price of sugar drops, the mills try to buy sugar cane
at cheaper prices. At later stages, there is bargaining between the mills and sugar
cane planters. A government official can assist or act as negotiator, enabling sugar
cane planters to sell at a higher price. Although both parties may agree on a price, when
the time comes for actual buying, the price of sugar cane is normally lower than the
agreement made. The sugar mills use their monopolized power in buying the sugar
cane.
1-16
Table # 1.4
Agreed price
1987-1988
203.65
1988-1989
150.97
1989-1990
136.22
1990-1991
144.9
1991-1992
150.45
1992-1993
179.72
183
1993-1994
199.64
212
1994-1995
298.66
300
1995-1996
301.91
300
1996-1997
286.03
300
1997-1998
299.73
300
Source : Sugar-cane and Sugar Office for the years from 1987-88 to 1997-98
1-17
The system for buying and selling sugar cane is different from the buying/selling
of other goods, as sugar mills need sugar cane to be fed at full capacity. They give
loans to sugar planters-called "money for maintaining plantation" to spend for planting.
This arrangement monopolizes the agriculturists sales of their sugar cane to the mills
according to the agreed volume. The mills pay money by installments to the
agriculturists after they have planted sugar-cane. The mill pays a second installment
when the agricultural officer of the mill has examined the plantation. The money which
the mill pays to the agriculturist will be charged at interest not less than 15% a year. The
mill will deduct the money for maintaining the plantation from the cost of sugar cane
after the agriculturist has transported sugar cane to the sugar mill.
Certain mills do not like to use the above method because the agriculturists
who have received money for maintaining plantation do not transport their sugar
cane to the mill after cutting. They instead ask other agriculturists to sell their sugar
cane. This results in a problem of insufficient sugar-cane for pressing by the mills, as
well as the farmer remaining in debt to the mills. Also, the mills do not want contact with
the numerous small-scale planters. They use local middlemen as a quota chief to act as
representative in making contact between planters and the mill. The quota chief is a bigscale agriculturist, who will sign a contract to provide sugar cane to the mill a not lower
than the agreed volume, for which this agriculturist will get payment from the mill. In
collecting sugar-cane for transporting to the mill, the quota chief will deduct an
amount from small-scale planters called cost for Mt head at about 5-10 baht /MT.
1-18
There are 42 sugar mills in the country for the production year 1997-1998. There
are many more sugar mills being constructed. The existing sugar mills, altogether can
press approximately 240,000 MT, a day. Of these, 22 mills have a pressing capacity
lower than 5,000 MT/day. The majority of the mills produce white sugar. There are only
3 mills which produce pure white sugar. They are the Banpong Sugar Mill, Supanburi
Sugar Mill and Mahakhum Sugar Mill, all located in the Central Region.
The average growth rate of sugar mills in Thailand during production years
1987/88-1996/97 increased by 3.10%, but the growth rate of production capacity or
pressing capacity of sugar-cane has increased during the same period by 25.27%
because the newly constructed mills or the existing mills have increased production
capacity. (See Table # 1.5)
1-19
Table #1.5 Number of sugar factories, sugar-cane squeezing capacity and growth rate.
Production Year
Number of
Factories
squeezing
(%)
sugar-cane
(MT/day)
1987-1988
32
24,121
5.97
1988-1989
31
-3.13
31,246
29.54
1989-1990
29
-6.45
37,528
20.11
1990-1991
27
-6.9
41,867
11.56
1991-1992
30
11.11
51,724
23.45
1992-1993
30
66,337
28.25
1993-1994
34
13.33
99,320
49.72
1994-1995
41
20.59
141,194
42.16
1995-1996
42
2.44
184,160
30.43
1996-1997
42
205,146
11.4
1997-1998
43
2.38
245,557
19.7
Source : Sugar-cane and Sugar-Office for the years from 1987-88 to 1997-98
Sugar mills in Thailand belong to both the State enterprise and the private sector,
distributed throughout the various regions of the country. The majority are
located in the Central Region, because most sugar-cane is planted there, This is
illustrated during production year 1996-1997, from 21 sugar mills in the Central Region,
1,548,423 MT, or 69.99% of the Total sugar of country was produced,
there (See Table # 1.6)
1-20
Table # 1.6
Voulme of sugar production and sugar residue for production year 1996-1997
classified by Regions.
Region
Number of
factories
Total
Sugar residue
Northern
64,384
169,518
233,902
128,662
Central
21
429,894
1,118,529
1,548,423
840,877
Eastern
94,583
225,176
319,759
190,248
Northeastern
29,016
81,204
110,220
63,607
42
617,877
1,597,427
2,212,304
1,223394
Total
Production efficencv.
1-21
Table #1.7 Production capacity and rate of sugar production.
Production
Actual capacity in
Percentage of
Sugar production
Percentage of
Year
pressing
change
per one MT
change
sugar-cane
Sugar-cane
(MT/day)
(Kgs.)
1987-1988
24,121.35
+6.74
79.34
-13.47
1988-1989
31,246.42
+29.54
72.31
-8.86
1989-1990
37,528.15
+20.10
79.70
+10.22
1990-1991
41,864.37
+11.55
80.84
+1.43
1991-1992
51,424.23
+23.55
84.68
+4.75
1992-1993
66,336.69
+28.25
68.16
-19.51
1993-1994
93,320.21
+40.68
72.70
+6.66
1994-1995
137,441.38
+47.28
79.05
+8.73
1995-1996
184,160.44
+33.99
83.96
+6.21
1996-1997
196,202.42
+6.54
84.78
+0.98
1997-1998
203,293.65
+3.61
83.77
-1.19
Average
96,994.48
22.89
79.03
-0.37
Source : Sugar-cane and Sugar-Office for the years from 1987-88 to 1997-98
1-22
Allocation of production capability.
Each year, before the sugar-cane-pressing season, the Ministry of Industry will
allocate the capability of each mill by considering the volume of sugar cane able to be
produced in each region and zone in a year as a criteria. This assesses the production
capability of each mill. In calculating capability, criteria includes the size and rapidity
of a box for pressing (5 rounds second) as a principle for calculating how much sugarcane/day the mill can press and over all in each production season. Each mill will then
be allocated a quantity of sugar cane. At the same time, the Ministry of Industry will
specify a proportion of white and raw sugar to be produced,
first producing sufficient white sugar for domestic consumption. The rest can be
produced as raw sugar. Any mill that wants to produce a particular type of sugar must
propose its production plan to the Ministry of Industry for permission. The volume of
replacement of production must be in accordance with the proportion and volume
allocated. When the mill has finished pressing the sugar-cane in accordance with
the volume allowed, the allocation is made and it appears that there is some sugar
cane left, it will again be allocated an average, according to the old criteria.
Association. This had the important objectives of: giving service and assistance to the
member mills in co-ordination with the government and private sectors domestically and
overseas in trading; in technology on sugar; and helping members to remedy problems
of negotiation between members and the relevant circle. After some time of operation,
the members argued amongst themselves. In May 1991, members of the Association
split into 2 parties, competing to reduce the price of sugar and each hoping to
monopolize the sugar market. There was also the important problem of shared benefits.
1-23
They were unable to agree, so separated and applied for registration of a new
association. This was permitted on the 6th of September 1991, under the name of the
"Trading Association for Thai Sugar Producers"
There are 4 main production groups for production year 1997/98: the "Trading
Association for Thai Sugar Producers" with 24 mills including the mills in Nakoparthom
province; the "Thai Sugar Mills Association" with 12 mills, the "State Enterprise" group
with 4 mills; and another independent group comprised of 42 sugar mills.
1-24
Table #1.8
Location (province)
Volume of sugar
the group
Production
(sacks)
Cholburi
172,972.00
Kanchanaburi
408,150.00
3. ThaMaka
Kanchanaburi
473,708.00
4. Thanburi (1)
Rajburi
196,405.00
5. Thanburi (2)
Rajburi
127,790.00
6. Ang-vien
Cholburi
336,030.00
Kanchanaburi
495,384.00
8. Mit-phol
Rajburi
559,589.00
9. Mit-siam
Kampaengpetch
491,575.90
10. Mit-kaset
Kanchanaburi
663,867.00
11. NamtanThai
Kanchanaburi
663,985.00
Kampaengpetch
190,988.71
13. Bangpong
Rajburi
569,376.40
Burirum
48,762.00
15. Tawan-awk
Rayong
484,906.00
Prachuabkirikan
288,186.00
Nakomsawan
214,986.00
Rajburi
594,909.00
7. Prachuab Utsahakam
12. Kampaengpetch
16. Pranburi
17. Ruam Phol Utsahakam
18. Rajburi
1-25
Table #1.8
Location (province)
Volume of sugar
Production
the group
(sacks)
State Enterpries group :
Lampang
178,470.00
Uttradit
208,026.00
3. Supanburi
Supanburi
383,763.00
4. Chonburi
Cholburi
402,324.00
1. SahaRueng
Nakom Panom
34,266.00
2. RermUdom
Udomthani
90,162.00
Rayong
155,624.00
1. Lampang
2. Uttradit
Independent group :
3. Rayong
Total
8,434,205.01
1-26
The volume of sugar production has increased and become an important export
of the country, Thai sugar production is classified into the production of white sugar for
domestic consumption, as specified by the government, the production of raw sugar for
export and pure white sugar for use in relevant industries, i.e. a factory for producing
carbonated water.
Thailand is minimal. In the past, beige colored sugar was produced, but not any more.
It can be seen from the characteristics of production that the increase in the production
of sugar will be to produce raw sugar for export.There is little increase in the production
of white sugar, but there is a rather high increase in producing pure, white sugar
because there is a great increase in the requirement of such sugar for the relevant
industries. (See Table #1.9 and 1.10)
1-27
Table # 1.9
Unit: MT
Year of
White sugar
Production
Pure white
Brown Sugar
Raw Sugar
Total
sugar
1987-1988
182,974
595
5,208
188,777
1988-1989
305,986
12,134
318,120
1989-1990
352,707
53,932
406,639
1990-1991
330,534
17,107
184,788
532,429
1991-1992
253,016
14,536
234,223
501,775
1992-1993
371,616
18,293
258,529
648,438
1993-1994
420,532
14,899
487,396
922,827
1994-1995
494,024
17,313
548,991
1,060,328
1995-1996
439,559
40,515
1,123,519
1,603,593
1996-1997
540,651
77,226
1,594,427
2,212,304
Source : Sugar-cane and Sugar-Office for the years from 1987-88 to 1997-98
1-28
Table #1.10 Showing expansion rate for producing various types of sugar.
Unit: Percentage
producing white
producing white
producing white
producing white
sugar.
raw sugar.
total sugar.
1987-1988
-17.98
+33.16
-18.77
1988-1989
+67.23
+132.98
+68.52
1989-1990
+15.27
+34.45
+27.83
1990-1991
-13.94
+242.63
+30.93
1991-1992
-15.03
-16.64
+26.83
-5.76
1992-1993
+25.85
+45.87
+10.38
+29.23
1993-1994
-18.55
+13.16
+112.96
+42.33
1994-1995
-16.20
+17.48
+88.53
+14.90
1995-1996
+134.01
-11.02
+12.64
+51.24
1996-1997
+90.61
+23.00
+104.65
+37.96
Average
+33.45
+12.24
+79.92
+23.23
Source : Sugar-cane and Sugar-Office for the years from 1987-88 to 1997-98
1-29
Sugar residue is an important by-product from producing sugar.
Each year, Thai sugar mills produce a great volume of sugar residue which can earn
extra income. During the years 1993/1994 - 1996/1997 sugar residue produced
increased at an average of 21.04% (See Table #1.11)
Table # 1.11 Showing production of sugar residue and the expansion rate.
Year of production
1987-1988
148,471
-7.65
1988-1989
226,388
79.42
1989-1990
306,163
14.93
1990-1991
387,976
26.72
1991-1992
341,973
-11.86
1992-1993
525,590
53.69
1993-1994
702,391
33.64
1994-1995
678,355
-3.42
1995-1996
909,552
34.08
1996-1997
1,223,394
34.51
1997-1998
947,192
-22.58
Average
585,222
+21.04
Source : Sugar-cane and Sugar-Office for the years from 1987-88 to 1997-98
1-30
To
understand the market system, we must fist learn about the structure of the sugar
market.
1-31
5. Small-scale industrial factories are factories which consume a smaller volume
of sugar than the much as big-scale industrial factories. These factories are the various
food-processing factories, which normally buy from wholesale merchants, rather than
buying directly from a sugar mill;
6.
Consumers
buying
from
general
shops
buy
the
highest
volume,
b) Market cycle.
Sugar from sugar mills sold directly to large-scale factories, that use a great
volume of sugar, will buy and sell in advance. The price is according to the Contract
and Agreement of both parties. Normally, buying/selling will be done around June, after
the mill has stopped production. The buyer must immediately pay a certain amount in
advance and wait for delivery of sugar in after the mill has started production January or
February. By buying in advance, the buyer is able to get a much lower price than the
market price, because the mill wants the money to repair machinery and make use of
that money as circulation capital to support the agriculturists to plant sugar cane. When
the sugar mill has finished producing, sugar is delivered to distributors and wholesalers.
Payment is made both in cash and on credit. The majority is short-term loans.
1 -32
CHART 1.1
Sugar mill
Distributor-Small-scaledistributor
Wholesale-Retail
merchant merchant
Consur lers
1-33
Condition of domestic sugar.
The market for white sugar within the country fluctuates, as there is a lack of
definite policy from the Government. Sometimes there is competition to reduce prices
and, in certain cases, the producer and distributor have to cancel business, although
there is little chance of this happening. In most cases, the distributors will group
together and specify the price, causing chaos in the market, because there is little
competition in the sugar industry. The period when the sugar market fluctuates most is
from November to May, the period when the mills open for pressing sugar cane and
producing sugar. There is a high volume of sugar for sale. Old sugar stock is put up for
sale, causing a drop in price. At the same time, price speculating merchants grasp the
opportunity to buy new sugar for stock and to later bring it out for sale when there is a
rise in price. After the sugar mills stop pressing sugar cane and stop producing sugar,
the price gradually goes up. This is dependent on demand and supply. If in any year,
there is low production of sugar, the price will have a higher trend. Hoarding of sugar
by price speculators still exists. Illegal exporting of sugar at provincial borders is another
problem, which causes turbulence in the sugar market in the country. During June to
November, the period when the mills stop operating, there trend towards a higher price.
1-34
production,
so it was able to export a high volume in the following years. A study of the condition of
the sugar market will be clearer when the following tables are considered.
1-35
Table # 1.12
Domestic
Volume of
Value
Price of
(Million Baht)
Sugar in world
market (Baht/Kg.)
(MT)
1987
232,411
233,726
16,789
37.0
0.90
1988
188,777
238,804
1989
318,120
324,459
15,795
46.9
1.56
1990
406,640
357,559
52,294
107.3
1.73
1991
532,429
364,680
145,010
330.7
2.08
1992
500,775
312,302
426,808
1,252.0
3.41
1993
648,438
362,316
258,294
1,086.2
3.34
1994
922,826
382,298
420,241
3,533.5
13.37
1995
1,060,329
400,000
584,988
5,223.9
9.15
1996
1,603,592
430,000
1,081,627
6,614.6
5.2
1997
2,212,304
500,000
1,654,610
7,445.0
4.5
1998
1,561,725
609,619
1,009,620
3,871.0
3.83
Source : Sugar-cane and Sugar-Office for the years from 1987 to 1998
1-36
From Table # 1,12, It is seen that the volume of sugar production continually
increased especially after 1994. The volume of sugar produced in the country in 1996
doubled the volume produced in 1991, from 532,429 MT. to 1,603,592 MT. At the same
time, there was some increase in domestic consumption, because of population
increase and higher consumer demand. Putting the amount together, it is less than 50%
of sugar produced in each year (Table #1.12). The rest of production for export
increased in volume every year.
1-37
2. The Sugar Industry of Thailand Co. Ltd. delivered sugar to M. Gologez Co. Ltd.
and Goke Brothers Co. Ltd. for 4 years, from 1995-1998, at 300,000 Long Ton/year.
The calculation country cost of sugar delivered to the contract party will, on
average, begin on the 16th day of the month, 2 months before delivery. This counts and
includes the 15th day of the following month. 2 sterling/Long Ton is to be deducted. The
rest will be sugar for short-term export, depending on the agreement made.
In 1994, there was a shortage of sugar on the world market. The price became
higher, on the world market in 1991-93 costing 2.08 baht/kg. 3.41 baht/kg. and 4.34
baht/kg., respectively. In 1994, the price went as high as 13.37 baht/Kg.
(See Table# 1.12). This was due to:
1-38
Important sugar exporting countries are Cuba, Brazil, Australia, South Africa,
Phlippines, Thailand, Argentina, etc.
world exports. Although these countries had higher production in 1992, it was reduced
by local consumption, which kept increasing, as most of those countries were classified
as developing countries. The population growth rate is high and certain countries are
unable to produce according to their set target. Sugar production has increased at a
reduced rate, as seen from Table #1.13.
1-39
Table # 1.13
Year
Production
World consumption
Stock
(Million MT)
1992
73.23
75.37
16.94
1993
76.79
77.26
15.95
1994
80.30
80.01
16.01
1995
79.60
77.53
17.58
1996
82.81
80.12
20.76
1997
87.02
83.17
25.44
1998
93.56
86.57
30.62
1999
92.16
89.97
32.02
1-40
In 1994 about 80,299 million MT. of sugar was produced was and about 80.011
million MT. consumed, so the price of sugar climbed. This was good for Thailand,
because, in 1994, sugar production increased greatly, as there was a big extension of
sugar planting.
382,298 MT. Exports were 420,241 MT, not including the sugar smuggled out of the
country. In 1994, sugar exports earnings were some 3,433.5 baht million, twice as high
as 1993.