Sugarcane market structure in Thailand

The sugarcane farmers Sugar mills

A. The sugarcane farmers

In Thailand, sugarcane is planted in the northeast, the north, the east and the central regions.

The cost of cane growing varies from region to region and between different kinds of crop new planting or ratoon. Most farmers do their cropping without experimenting with modern techniques. Due to lack of modernization and technology, cane farmers suffer from high costs of production and low yields.

Cane farmers sell their product to sugar millers by these methods:

1. Selling directly to sugar mills. In this case, farmers require a great sugarcane farm area to meet the quota. These farmers sign contracts with the sugar mill managers.

2. Selling through the quota of the quota man. Most farmers are able to plant sugar at a minimum amount and sell their products directly to sugar mills.

The sugarcane market in Thailand was a buyer's market before the establishment of the Sugarcane Association. The cane price was specified by sugar mill managers. Sugarcane farmers had no power to bargain against the sugar mill managers because:

- Sugar mills are the only markets for sugarcane products. Moreover, farmers make a forward transaction contract with the sugar mill managers.

- The cane easily loses its sugar content, so after cultivation it should be processed as quickly as possible.

- Some cane sellers owe promotion money to their contracted managers. The have to sell their product to the managers in order to pay back the debts.

After the Sugarcane Farmer Association was established, the structure of cane prices determination changed. The price determination is made by the result of price bargaining between representatives of the Sugarcane Farmers Association and the representatives of private mills. If they cannot agree on a final sugar price, a government official will try to compromise them. The most convenient time for making contracts is around October to November, which is about one month before the new sugar production season begins.

There are three groups of sugarcane farmers: members of the Sugarcane Farmer Association, members of the Farmer Agricultural Cooperative and independent cane farmers who are not members of either body. These groups can be further separated into farmers with or without quotas from sugar millers.

B. Sugar mills

In Thailand, centrifugal sugar can be divided into:

1. Raw sugar, the end product of the cane mill and the raw material for the refinery
2. Brown or raw washed sugar.
3. Plantation white sugar, the most common sugar product manufactured by modern sugar mills. It is both directly consumed and processed by industries.
4. Refined sugar, one of the purest known types of organic subsistence. It contains 99.96 percent of sucrose.
5. Special sugar, processed from plantation white sugar or refined sugar.

The market for Thai sugar can be divided into the domestic market and the foreign market. The domestic market structure is shown in the following diagram:

The diagram indicates that sugar mill managers sell their sugar to agents and to some big industries, such as soft drink and food cannery. The agents sell sugar to their sub-agents, wholesalers and to exporters. The sub agents sell their sugar to wholesalers, retailers and to small industries. The wholesalers sell their sugar to the retailers and the retailers sell to consumers.

:

Growing areas of sugarcane in Thailand Thai sugar production Domestic demand Sugarcane market structure in Thailand - Sugar Farmer - Sugar Mill Future prospects of Thai sugar industry