Jump to content

Sugar industry must swallow bitter pill


webfact

Recommended Posts

Sugar industry must swallow bitter pill

By Wichit Chaitrong 
The Nation

 

79c27b938ff52008c3f6c80f45e3c536.jpeg

Isara poses with the "Friendship Award", presented by the Chinese government.

 

Hit by low prices, Mitr Phol Group chief says producers must focus on increasing productivity and cutting costs

 

Challenges lie ahead for the global sugar industry and Thai producers must prepare for higher  productivity and costcutting, says Isara Vongkusolkit, chairman of Mitr Phol Group, the world’s fifth-largest sugar producer, Thai farmers should change their thinking when it comes to production, he said. 

 

“They should not be preoccupied with prices, but should instead focus on raising production volume and lowering costs,” he responded when asked about the low prices of farm products, including sugar canes.

 

If sugar cane farmers and sugar producers could increase their productivity, they will have much to gain when the market turns around, he said. 

 

Isara was optimistic of a rebound in sugar price next year, from the current level of US$12 cents per pound.

 

The low prices have done much damage to many producers worldwide and many of them may go out of business, he noted. 

 

He forecast that the group’s total revenue would stay flat at Bt90 billion this year with sugar production accounting for Bt50 billion, while its peripheral businesses of renewable energy, wood-substitute materials, fertiliser and logistics make up the balance. 

 

“There is zero growth in revenue this year as sugar prices have remained low. 

 

“However, production has risen and we can say our business is growing,” he said.

 

Despite low prices, he believes sugar cane farming still generates a higher income for farmers than rice. 

 

A onerai plot of sugar canes could yield up to Bt9,600 in income for farmers, compared with just Bt3,500 for rice growers, he said, adding that the calculation was based on recent market prices of the two farm produce, volumes of production per rai and the sizes of government subsidy, he noted.

 

“The productivity per rai is lower in rice farming due to the need for more water, not to mention many rural areas lack irrigation infrastructure,” he said. 

 

“On average, a onerai rice plot yields about 250 kilograms of paddy. With the price of paddy at about Bt10 per kilogram and Bt1,000 in government subsidy per rai, the revenue would just be Bt3,500.

 

Whereas a onerai plot of sugar cane will generate about 12 tonnes of the produce at Bt800 per tonne, bringing in an income of Bt9,600, he explained. 

 

Isara conceded that new tax structure on beverages with high sugar content had adversely impacted the local sugar industry.

 

It is a social trend where sugar is blamed for many health issues, but many tend to overlook salt which does more harm, he lamented.

 

Thailand restructured its sugar industry after Brazil, a rival proฌducer, raised the issue of Thai subsidies before the World Trade Organisation.

 

“Market liberalisation is expected to make the Thai sugar industry more volatile in years to come,” said Nipon Poaponsakorn, veteran economist at Thailand Development Research Institute.

 

When protectionist measures such as high tariffs on imports, fixed domestic prices and large government subsidies have subsided, sugar farmers and producers will face pressure from global market price, resulting in volatility in home prices, he pointed out.

 

Meanwhile, the government has pledged to support sugar cane farmers with a handout of Bt50 per tonne, followed by sugar producers’ offer of Bt70 per tonne. Each farmer is entitled to receive support for up to 5,000 tonnes. 

 

Isara, however, is confident that the huge market in China will offset any impact on the Thai industry. He also expects higher revenue from the country. 

 

The group has been active in sugar production in China for 25 years while its new facility will start up by the end of the year. 

 

Isara was recently honoured by the Chinese government with the “Friendship Award”, its highest official recognition for foreign experts who have made outstanding contributions to the country’s economic and social development.

 

It also plans to invest in animal feed production in China and is currently working with a US company on the production of xylose sugar, a variant with no calories.

 

The Mitr Phol Group is betting on the fast-expanding Asia market, given its rapid growth in population, Isara said.

 

Source: http://www.nationmultimedia.com/detail/business/30356425

 
thenation_logo.jpg
-- © Copyright The Nation 2018-10-15
Link to comment
Share on other sites

“On average, a onerai rice plot yields about 250 kilograms of paddy......"

 

That farmer must be crap at his job then as the average everywhere in our area from paddy is about 650 to 750 kg's per rai.

That makes the return from rice and sugar cane broadly similar.

The last couple of years several cane farmers have switched to rice because the return from sugar has been very low but having said that the price of rice has also been low.......terrible times to be a farmer in Thailand.

Link to comment
Share on other sites

12 minutes ago, edwinchester said:

“On average, a onerai rice plot yields about 250 kilograms of paddy......"

 

That farmer must be crap at his job then as the average everywhere in our area from paddy is about 650 to 750 kg's per rai.

That makes the return from rice and sugar cane broadly similar.

The last couple of years several cane farmers have switched to rice because the return from sugar has been very low but having said that the price of rice has also been low.......terrible times to be a farmer in Thailand.

Sugar is a commodity going off the table,its being taxed hoping to reduce the intake for health reasons.I don't use sugar,

 why increase production. Find another crop to replace it.

Link to comment
Share on other sites

19 minutes ago, Percy P said:

Sugar is a commodity going off the table,its being taxed hoping to reduce the intake for health reasons.I don't use sugar,

 why increase production. Find another crop to replace it.

And please note that the long statements by mr. issara conveniently didn't mention this fact.

 

Why is he encouraging sugar cane farmers to produce more when society and governments are pushing for a big drop in personal sugar consumption.

Link to comment
Share on other sites

40 minutes ago, scorecard said:

And please note that the long statements by mr. issara conveniently didn't mention this fact.

 

Why is he encouraging sugar cane farmers to produce more when society and governments are pushing for a big drop in personal sugar consumption.

Because he has to stay an optimist, otherwise shares and other stuff would plummet 

Link to comment
Share on other sites

sugar, the cause of diabetes, cancer, obesity, heart disease should be taxed for all the damages it does ... 5th producer in the world want farmers to get less & work harder so he can keep his billions of profits while the society is getting more & more fat & sick... been here 10+ year and visiting 18 years and people in the beginning, you hardly saw a fatty thai, now, one out of ...

 

why not make the mary jane legal to grow and sell it worldwide ????

Link to comment
Share on other sites

2 hours ago, Percy P said:

Sugar is a commodity going off the table,its being taxed hoping to reduce the intake for health reasons.I don't use sugar,

 why increase production. Find another crop to replace it.

Why increase production?

Because some of the very richest people in Thailand control the industry and they will do whatever they can to up production in spite of all the negatives to health and the environment.

Link to comment
Share on other sites

2 hours ago, scorecard said:

And please note that the long statements by mr. issara conveniently didn't mention this fact.

 

Why is he encouraging sugar cane farmers to produce more when society and governments are pushing for a big drop in personal sugar consumption.

He forgot to mention that farmers should look at diversifying into other crops. Also the article kind of forgets to mention the full range of area's that the group are into, as in it mentions renewable energy, but not the other types as mentioned in this profile.  https://www.forbes.com/profile/isara-vongkusolkit/#7dc747ce7a8b

Link to comment
Share on other sites

Rather than diversifying into other crops, I think it would be better to diversify the end use. Sugar is easily converted into alcohol, which can be exported for consumer use, especially with a little creativity and quality control, into a high quality rum. That’s how the global giant brand Bacardi started. Also alcohol as a fuel could be increasingly pushed to reduce dependence on oil. 

 

Time for ThaiBev, CP, Red Bull & PTT to start thinking outside the box. No charge for the advice!

Link to comment
Share on other sites

Sugar mills are almost self-sufficient in energy.  By burning the fibrous cane residue, bagasse, they generate electricity and steam for factory operations.  In addition, more than half of the renewable electricity generated (around 500 GWh) is exported to the electricity network.  The use of renewable bagasse to produce ‘green’ biomass energy reduces the nation’s greenhouse gas emissions by over 1.5 million tonnes annually. Sugar News Australia.

 

Also have a read: https://www.ethanolfacts.com.au/

 

India is causing a lot of problem with the sugar price.

 

Need to consolidate industry moving into more profitable holdings together with using the industry to its potential. None of this is mentioned in the OP.

Link to comment
Share on other sites

4 hours ago, scorecard said:

And please note that the long statements by mr. issara conveniently didn't mention this fact.

 

Why is he encouraging sugar cane farmers to produce more when society and governments are pushing for a big drop in personal sugar consumption.

Because he knows the answer already: pushing family farms out of the market via bankruptcy and foreclosure, then having corporations purchase fallow land and consolidate the best land, and use technology to push up production on less land.  Total production will not increase, but under corporate management, crop yields increase and sugar crops become economically sustainable and profitable.

Link to comment
Share on other sites

Quote "focus on raising productivity". Type 2 diabetes and obesity is on the increase in Thailand (and other countries) and this is the LAST thing to do. The overuse of sugar in food in Thailand is dreadful - just try a Thai brand of salad cream or mayonnaise!

Link to comment
Share on other sites

9 hours ago, Percy P said:

Sugar is a commodity going off the table,its being taxed hoping to reduce the intake for health reasons.I don't use sugar,

 why increase production. Find another crop to replace it.

Cannabis?

Link to comment
Share on other sites

14 minutes ago, HerbalEd said:

What "other stuff"?

 

Value of companies.

 

Just imagine him painting a grim future.. then people would get out of sugar producing and the value of such companies would plummet (not all companies have shares)

Link to comment
Share on other sites

11 hours ago, edwinchester said:

“On average, a onerai rice plot yields about 250 kilograms of paddy......"

 

That farmer must be crap at his job then as the average everywhere in our area from paddy is about 650 to 750 kg's per rai.

That makes the return from rice and sugar cane broadly similar.

The last couple of years several cane farmers have switched to rice because the return from sugar has been very low but having said that the price of rice has also been low.......terrible times to be a farmer in Thailand.

Terrible times, indeed, for those that are forced to play the govt/aggie mafia manipulative games.

Link to comment
Share on other sites

Next time you fill your car or motorbike with gasohol, think where the alcohol comes from, a lot comes from molasses, which is a by-product of the sugar industry, with crude oil prices rising the government will be wanting more alcohol  produced ,you could say the sugar  comes second ,cassava is also used to produce alcohol .

As for producing 12 ton / Rie, a lot of farmers will not be getting that, a lot of cane is grown on land that is not suited for growing sugar cane, water is often the limiting factor  farmers grow it as an alternate crop to rice hoping to make them some money,it is a big investment ,first year very little if any money is made, initial  growing costs use all the  money ,end of the 3ed year sometimes the 4th, the lifespan of a sugar cane crop  farmers have not made any money and go back to rice .

Link to comment
Share on other sites

Maybe its time that the government takes its fingers out of business it does not understand basics. Forget subsidies and quotas. 

Rather allow accessible and easy-to-understand financing on cooperative basis and take the loan sharks to the cleaners. 

As a retail customer I was not allowed to buy ONE kilogramme of sugar; they expected me to buy at least five - happened so at Makro. Well, Big C around the corner sold me the very same sugar in a one kilogramme packaging. Wondering, how many customers walk home from Makro with lots of sugar they dont need. 

And education would help the farmers realizing, that if 50% of neighbours grow sugar there might be some other crops which would sell better. But then again, that is against OTOP; another hilarious idea of business idiocy at the root level. 

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    • No registered users viewing this page.




×
×
  • Create New...