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Raising Prices Only Answer to Sugar Industry Woes

Posted on: Saturday, 31 December 2005, 00:00 CST

By Yuthana Praiwan, Bangkok Post, Thailand

Dec. 31--Retail prices of sugar, which have been frozen for more than two decades, should be freed up now to tackle shortages and skyrocketing prices, says Chakramon Phasukvanich, the Industry Ministry's permanent secretary.

His suggestion came only one day after he stepped down as chairman of the Cane and Sugar Board (CSB), the policymaking body for the industry.

In Bangkok, consumers report trouble finding sugar in stores, whose owners have been told by wholesalers that no more supplies are available.

Mr Chakramon said raising retail prices was the only way to systematically solve the problems plaguing the sugar industry. These include debts of 15 billion baht owed to financial institutions, as well as widespread hoarding by traders to take advantage of a possible price hike in the future.

Domestic sugar prices are currently capped at 14.25 baht per kilogramme but in some provinces the price has reportedly moved up to 16-19 baht, while the overseas price excluding freight costs has reached 17-18 baht.

It is claimed that some traders have been smuggling sugar out of the country to tap higher prices abroad.

Mr Chakramon said he quit the CSB out of frustration over his inability to tackle longstanding industry problems.

"It's very embarrassing for me to stay on because any solutions proposed are all rejected. I am just the CSB chairman who can only make recommendations, I have no power to raise the sugar price."

He said a sugar price hike was justified since it had been frozen for more than 20 years while the industry's costs had increased significantly for production necessities such as fertiliser, pesticides as well as transport.

As an economist, he said, he believed a price increase would not have much impact on inflation but it would hurt the soft-drink industry. Prices of soft drinks are now seven or eight baht per bottle, reflecting other changes in industry costs over time, against 1.50 baht 20 years ago.

He also denied that he had proposed raising the ex-factory price of sugar by five baht per kilogramme, saying only that the existing price of 11 baht was inappropriate given current circumstances, and should be raised a little to reflect the increase in production costs.

However, whether the increase will be approved will depend on an agreement by the ministers of Industry, Agriculture and Commerce.

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Copyright (c) 2005, Bangkok Post, Thailand

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Source: Bangkok Post

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