Sugar market : higher prices for everyone, subsidy debt to be repaid, and farmers don’t earn money

As you may know, the gvt allowed a 37 % increase of price of sugar.

This article of TNA gives other interesting details about this totally distorted market. So distorted and weird that it should be taught in school…

I will try to summarize :

-consumers and businesses are hit hard with an increase of 5 THB per kilo ( + 37 % )
-The Bank for Agriculture and Agricultural Coopperatives suffers a debt of 24 billions (because of years of subsidy of sugarcane farming)
-The surgacane growers don’t earn money, even with the price hike (because their costs have increased dramatically)

Talk about a serie of economic non-senses !

Those with a sweet tooth who prefer to put plenty of sugar in their coffee might start having to think twice and become sugar-free, after the government agreed to increase sugar price by 5 Baht per kilogram. The government’s decision will likely have a grave effect on consumers and sweetmeat sellers.

A sweetmeat vendor said “Obviously our production cost has risen. We have less profit.”

Although the sugar price hike has caused trouble for sellers, it has great benefit not only for sugarcane growers —who have suffered from low prices for many years—but also the Bank for Agriculture and Agricultural Coopperatives or BAAC.

“As currently the BAAC has subsidised 24 billion baht to help with sugarcane farming, each increased 5 Baht per kilogram of sugar sold will go to BAAC. It is estimated it will take 5 years for BAAC to clear existing debts.” said Akachai Ariyamongkonchai Deputy Secretary General Cane Planters Association For Zone 7.

For sugarcane growers, the price rise is as high as 700 to 807 baht per ton. Still, they cannot break even. One rai can grow cane at a maximum of 12 tons, which means they get the most income of 9,684 Baht per rai. The growing cost is high, at 10,000 baht per rai, especially when chemical products and other materials are higher the price due to the oil price hike.

Anchalee Chamnongkol Sugarcane grower said “It’s great that the government has increased the sugar price but it can’t cover our growing costs anyway.” (TNA)

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