Sugarcane price raised by 100 baht

AGRIBUSINESS / NEW INVESTMENT, COMMODITIES AND EXPORT MARKETS

Sugarcane price raised by 100 baht

ARANEE JAIIMSIN

The cabinet yesterday increased the initial sugarcane price for the current crop year by 100 baht to 700 baht per tonne in response to strong complaints from farmers. Deputy Industry Minister Piyabutr Cholvijarn said the adjustment came because the previous sugarcane price set by the government was lower than actual production costs.

''The average production cost for sugarcane in the 2007-08 crop year is 807 baht per tonne, causing farmers to be disappointed with the previous sugarcane price approved by the government,'' he said.

Thailand's sugarcane output is targeted at 68.15 tonnes in the 2007-08 crop year. Following the cabinet's resolution, the Cane and Sugar Fund needs to pay 4.23 billion baht in total to farmers for their entire sugarcane production.

The Cane and Sugar Board will seek five-year loans from the Bank of Agriculture and Agricultural Co-operatives (BAAC) for the payment, Mr Piyabutr said.

''With this solution, the problem of sugarcane prices in the 2007-08 crop year is already resolved,'' he said.

Aside from new debt of 4.25 billion baht, the Cane and Sugar Board had owed the BAAC 12 billion baht. The amount has been restructured with a repayment period extending to 12 years from the original five years at an interest rate that would cost 30 million baht per year, he added.

The government yesterday also approved a budget of 450 million baht per year over the next 13 years to repay outstanding debt.

In addition, the Cane and Sugar Board would gain revenue worth 1.3 billion baht per year after deducting value-added tax from the sugar price. That money would be also spent on debt payments.

The Board also has to pay 5.28 billion baht to sugar refineries this year partly due to the difference between initial and final sugarcane prices in the 2006-07 crop year. The initial sugarcane price in 2006-07 was set at 800 baht per tonne, while the final price came out at 702.19 baht.