Thailand - Government floats domestic sugar price

Industry Minister Uttama Savanayana announced that the government has invoked Section 44 to float the local price of sugar and eliminate sales administration, according to local press reports.

The local price was previously set by the government, which was challenged by Brazil at the World Trade Organization (WTO) in 2016, arguing that Thailand's subsidies for cane farmers were increasing production and dragging down global prices.

The plan to float the sugar price had been postponed since December 1.

The moves were outlined in a series of government documents, including an executive order by Prime Minister Prayuth Chanocha suspending a price control clause in the country's Cane and Sugar Act of 1984. "From now on sugar prices will move according to market forces," Savanayana told reporters at a news conference on January 16.

Somchai Harnhirun, the deputy industry minister, said the ministry will revoke its 70:30 profit-sharing system, in place since 1984, requiring the end of its quota system as domestic prices are floated. He added that Thailand has revoked the sugar quota system, which sets aside three quotas each year to administer sales. Quota A set aside sugar for domestic sale, quota B for state-run exports and quota C covered the quantity of sugar to be exported by private sugar millers. "The quota system will be phased out once the floating price is effective, but the government has to reserve a buffer stock for one month to serve and secure sugar supply," Somchai said.

Thailand already stopped its direct subsidy program in 2016, according to Warawan Chitaroon, a deputy secretary-general of the Office of Cane and Sugar Board.