High sugar prices unlikely to benefit ailing farmers

High sugar prices unlikely to benefit ailing farmers

A sugarcane field in development stage is seen at a farm in Jacarezinho, Brazil, on Jan 1, 2019. (Reuters photo)

Thai sugarcane farmers may not benefit from higher global sugar prices as their production costs, including fertilisers and oil, are also on the rise amid the Russia-Ukraine war.

Sugar prices on the world market have increased as Brazil, the world’s largest sugar producer, is using more sugarcane as a feedstock for ethanol manufacturing, said Narathip Anantasuk, head of both the National Federation of Sugarcane Planters and the Office of Sugarcane Planter Association Zone 7.

“Earlier this year, the global sugar price stood at 18 cents a pound. It has already risen to 20.31 cents a pound,” he said.

Brazil, also the world’s second largest producer of ethanol, is increasing ethanol production capacity because the product has a high profit margin despite the ongoing global oil price surge.

Ethanol is a renewable fuel used in a mix with gasoline using different formulae.

A switch from sugar production to ethanol production in Brazil is a major cause of higher global sugar prices.

Brazil remains the top sugar producer, with its sugar production capacity increasing by 7%, or around 34.5 million tonnes of sugar, since last year.

“The association is concerned about the 2022-23 crop year of sugarcane farming in Thailand because the war is unlikely to end soon and its impact continues to affect the prices of fertilisers, oil, chemical products and labour,” said Mr Narathip.

Up to 57 sugar factories in Thailand are currently in the process of crushing sugarcane they have bought from farmers since December last year.

So far, the factories have received around 91.7 million tonnes of sugarcane.

“The association expects sugarcane output for the 2021-22 crop year to reach 91.9-92 million tonnes,” said Mr Narathip.

Sugarcane output stood at 134.9 million tonnes in the 2017-18 crop year, before plunging to 74.8 million tonnes in the 2019-20 crop year and 66.6 million tonnes in the 2020-21 crop year.

According to the Sugar Industry Club under the Federation of Thai Industries, there are about 800,000 workers in the sugar industry. Most of them are migrant workers from neighbouring countries, especially Myanmar, Cambodia and Laos.