Sugar Industry Deregulation Could Curb Price Distortions
Posted on: Tuesday, 14 March 2006, 12:00 CST
By Yuthana Praiwan, Bangkok Post, Thailand
Mar. 14--Thailand's sugar industry should be partially deregulated to resolve distortions in the current pricing system, according to a study by the Cane and Sugar Board.
Rataporn Cheungsanguansit, the board's secretary-general, said local retail sugar prices remained capped when prices in the world market were soaring, and the current structure was used as a tool for political interests.
Although the government decided to raise the ex-factory sugar price by three baht per kilogramme last Tuesday after 26 years of controls, this did not mean the industry was deregulated, she said.
The proposed deregulation includes the revocation of controls on the number of sugar mills, allowing millers to establish facilities at locations they deemed suitable, and letting millers determine the export market while sugar supply for local consumption would be prioritised.
The planned deregulation also includes the gradual demolition of the tax barrier on raw sugar imports to reduce the protection of the local industry. The tax rate on sugar imports currently stands at 94 percent.
This would encourage local millers to increase their capacity. At present, mills only operate machinery from November to March, with operations remaining idle for the rest of the year. If raw sugar imports were allowed, idle machinery could go into production processing it.
Ms Rataporn said that a central committee responsible for imposing pre-harvest sugarcane prices every year would be made up of independent people who weren't involved with the farming and milling industries. However, the net revenue ratio between planters and millers would remain 70:30.
The deregulation proposals will go before the new government for consideration.
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Source: Bangkok Post
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