MECAS(22)15 – Thailand’s Sugar Industry: the New Paradigm

Thailand’s sugar industry has staged a production recovery after two disastrous years in 2019/20 and 2020/21, brought on by drought and loss of land to competing crops, coupled with lower world sugar market prices. The abrupt slump in industry fortunes came after more than a decade of structural growth, supported by proven resilience as the second largest exporter after Brazil, and expectations for robust industry growth going forward. Key weaknesses and challenges for the industry are exposed, which question how robust the current sugar recovery will prove to be, or if there is potential for Thailand’s sugar sector to revert to an expansion path in the medium term.  Partial deregulation of sugar policy since2018, and the peculiarities of the Thai sugar industry, mean a new paradigm is emerging. For growers, transformative farming practices is at the helm of the need to boost productivity, ensure sustainability and ward off the threat of land being switched to cassava and other crops. This is in the context of significantly rising production costs and continuing labour scarcity. More generally, there is a need for farming practices to proactively address climate change and increasingly unreliable rainfall. Growers, too, look to secure additional revenue via by-products, such as bagasse, into the official revenue sharing legislation. Millers consistently resist such a change, even after Thai lawmakers recently passed amendments to the Cane and Sugar Act. Millers, with their huge investment in processing capacity, look to ensure and boost cane supply by paying premium cane prices, above government-set benchmarks. But this requires world market prices to be high enough, coupled with greater revenues from ethanol and electricity (and potentially bio products), in order to improve industry returns for all. Transformational cane farming, adapted and appropriate legislation and targeted growth by embracing diversification opportunities in bio-products - driven by the government’s renewables policies and ambitions - are all key to shaping the future of Thailand’s sugar industry. 


Part 1: Thailand’s Sugar Industry						
	(1) Overview									
	(i) Expansion Plans 2016-26								
	(2) Cane Growing									
	(i) Sugar Canegrowing Areas								
	(ii) Independent Smallscale Canegrowers						
	(iii) Cane and Sugar Yields								
	(iv) Green Cane Harvesting								
	(v) The Price of Cane									
	(vi) Cane Area and Competing Crops						
	(vii) Cane Supply Contracts and Miller Support				
	(3) Sugar Milling									
	(i) Major Milling Groups								
	(ii) Sugar Production									
	(iii) Cane Quality and Factory Efficiency						
	(iv) The Price of Sugar								
		(a) Domestic Market								
		(b) Export Markets								
	(4) Markets										
	(i) Domestic										
	(ii) Export										
	(5) Imports										
	(6) Production Costs								
Part 2: Diversification and Value Adding	 				
	(1) Fuel Ethanol									
	(2) Cogeneration (biomass Power)						
Part 3: 2022/23 Outlook 								
Part 4: Outlook to 2027/28							
(1) Key Issues									
(i) Cane Prices and Competition with Cassava					
(ii) Raising Technical Efficiency							
(iii) New Regulation Hiatus								
(iv) Miller Expansion									
(2) Cane and Sugar Production to 2027/28				
(3) Consumption Post Pandemic						
(4) Export Availability								
Part 5: Further Diversification Potential					
	(1) Electric Vehicle Policy and Fuel Ethanol				
	(2) Bio Products Progress and Potential					
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