Khon Kaen Sugar Industry:Sugar price float a boon for industry

The NCPO has of late invoked Section 44 of the interim constitution to float the localprice of sugar to be on a par with the global rate and scrap the domestic quota system tocomply with WTO rules and defend against accusations of foul play from Brazil over thecountry’s subsidies for its sugar producers. The price float is expected to bring domesticretail sugar prices down by Bt2-Bt3/kg to Bt17-Bt18/kg from Bt20/kg. Besides, thecollection of a special Bt5/kg tax on domestic sugar sales that funds the state-run Caneand Sugar Fund (CSF) has also been terminated. In our view, the freeing up of domesticsugar prices would be a boon for the industry on bigger returns from sugar sales thanunder the previous structure as detailed in the following figure