Measures taken to secure sugar supply

The Office of the Cane and Sugar Board (OCSB) is beefing up measures to ensure that there is enough domestic sugar after facing increased demand from food industries as the economy recovers, said deputy secretary-general Pongtheb Jaru-ampornparn.

Mr Pongtheb said beverage producers and food processors for export were switching to domestic sugar instead of sugar for export, which pushed recorded sugar stocks down last week to 30,000 tonnes, from the usual 40,000 tonnes.

Some traders have been seeking extra profit by buying sugar allocated for the domestic quota and exporting it.

Sugar traders can earn 37 baht per kilogramme in the Philippines and 40 baht in Indonesia.

The Thai government caps sugar prices at 23.50 baht per kilogramme for refined sugar.

The sugar board is planning to increase the ban on food exporters who exploit domestic sugar from the previous one year to five years.

Sugar prices began rising early last year and have remained at or near 30-year highs since then.

The world price in December averaged 23 US cents per pound, up 75% from the start of 2009. Prices for March delivery are currently quoted at 27.6 cents.

As well, Mr Pongtheb said that the Internal Trade Department of the Commerce Ministry had been assigned to check on sugar sales to ensure that prices are in line with the government's price controls.

The OCSB will also co-operate with the Customs Department and the police to prevent smuggling.

Chalat Chinthammit, executive vice-president of Khon Kaen Sugar Industry, said millers wanted the government to prevent smuggling since it would support sugar prices of Thailand's neighbours.

He added that increasing the amount of sugar allocated each week would encourage the flow of sugar to other countries, which should help to keep the sugar stock near 40,000 tonnes.

The OCSB has said that if a domestic sugar shortage occurs, allocations for later periods would be increased.

"If we prevent sugar smuggling, there will be no need to increase the allocation," said Mr Chalat.

Sugar mills have already sold 90% of their sugar in the futures market, and some mills will have to buy back sugar to sell in the domestic market if the government declares a shortage of domestic sugar, said Mr Chalat.

source: bangkokpost