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Future prospects of Thai sugar
industry
Sugarcane production is projected
to reach 82.4 million tons in 2005, with sugar output attaining
some 8.9 million tons. For sugarcane, this would represent
a 32 percent increase from 1996, or 3.1 percent average annual
growth; and for sugar, a 41 percent increase over the 1996
output, or 3.9 percent average annual growth. Given the industry's
past performance these projections do not appear unrealistic.
An extension of areas under sugarcane is anticipated in the
Northern and Northeastern regions, partly a result of converting
land from other crops. By 2005, the area under cane is expected
to total 1.25 million ha, a 17.6 percent increase over 1996,
or 1.8 percent average growth per year.
A pivotal factor in achieving the production goals of the
industry is the improvement of sugar yield per ton of cane.
Sugar yield depends on several factors relative to the sugarcane
(harvesting and handling conditions and quality) and the sugar
factory (process, operations and composition of output). Since
almost all sugar factories are still affected by underutilization
problems, they seek to maximize sugarcane volume, not sugar
yield, to mitigate costs. This leads to strong competition
for sugarcane, which can worsen the quality of crushed sugarcane
in terms of purity and freshness, and thus negatively affect
sugar yield.
According to international sugar production cost analysts,
Thailand ranks among the world's lowest cost producers. Efforts
to expand cane production to better match milling capacity
should enhance this status. However, in the long run Thailand's
future as a very low-cost producer is uncertain in view of
sharply increasing land costs reflecting rapid industrialization
and rising labor costs.
Domestic demand is likely to continue to expand rapidly, but
growth in production should continue to allow Thailand to
absorb only about 25 to 30 percent of annual output internally.
Domestic use is projected to expand to 2.33 million tons in
2005, up 50 percent from 1996, or an average annual growth
of 4.6 percent per year. With stable use of coconut (palm)
sugar as a sugar substitute for home cooking, increased demand
for sugar would most likely come from industrial users for
the manufacture of processed foods and beverages. The growth
potential for increased sugar demand by the expanding soft
drink industry is projected to be particularly strong in the
years ahead as consumption of these beverages approaches the
level of Singapore and Hong Kong. Nonetheless, among the world's
top five exporters, only Australia and Cuba use a smaller
percentage of sugar production for domestic needs. With anticipated
growth in production, exports are also expected to expand
substantially.
The industry has identified three areas for improving management
of the export sector: (1) the transportation system should
be upgraded to cope with larger volumes of sugar moving from
sugar factories to export terminals; (2) a clearing house
for bulk sugar should be established to allow swaps of sugar
under fair, established settlement procedures; and (3) the
bag-loading system should be modernized to cope with labor
shortages.
With respect to markets, the industry is conveniently situated
in proximity to expanding Asian import markets which allow
shipping advantages, including prompt delivery and reduced
freight rates, not available to competitors outside the region
Source: FAO
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