Market Giant: Thailand
Kingsman Asia Sugar Conference September 7 – 8, 2017
Andaz Delhi, India
by Pattarapong Pongsawasdi Deputy Managing Director
Buriram Sugar Public Company Limited BRR
Agenda
•Buriram Sugar Public Company Limited (BRR)
• Thai Sugar Industry
•2017/18 Crop Year
• The New Regime
•Domestic Market
• The Expansion
3
- Situated in the
Northeast of Thailand
- Sugar Mill: 24,000 TCD
- Three Co-generation
Plants with total
capacity of 29.7 MW
- One Fertilizer Plants
with 30,000 ton
production capacity
per annual
BRR
Cane fields within 40 km radius BRR
Mill
2016/17
2017/18
2017/18F 38,400 HA of Acreage 2,800,000 Tons of Cane Crushed
2016/17A 32,000 HA of Acreage 2,210,000 Tons of Cane Crushed
Source: Buriram Sugarcane Research and Development
Thai Sugar Industry 2016/17 crop year - 54 mills in operation
- Northeast 20 - Central 22 - North 8 - East 4
- With current crushing capacity of 1,200,000 TCD
- Growing areas: - 45% Northeast - 30% Central - 25% North
Source: Office of Cane and Sugar Board
THAILAND SUGARCANE ACREAGE & PRODUCTION
2 0 1 1 / 1 2 2 0 1 2 / 1 3
2 0 1 3 / 1 4 2 0 1 4 / 1 5
2 0 1 5 / 1 6 2 0 1 6 / 1 7
2 0 1 7 / 1 8 F
1.43 1.49 1.57 1.75 1.75 1.75 1.77
Unit: Mil hectare
2 0 1 1 /12 2 0 1 2 /13
2 0 1 3 /14 2 0 1 4 /15
2 0 1 5 /16 2 0 1 6 /17
2 0 1 7 /18F
97.98 100.00
103.66 105.96
94.05 92.90
107.00
Sugarcane
Unit: Million Metric Tons
10.25
10.02
11.29 11.30
9.78
10.00
11.00
Sugar
Unit: Million Metric Tons
Source: Office of Cane and Sugar Board
- Acreage expanded substantially - Favorable weather condition
Sugarcane is still one of the popular crops compared to others. It accounts for 8% of total agricultural land in Thailand.
Source: Office of Agricultural Economics, Ministry of Agriculture and Cooperatives
Monthly Rainfall, Jan – Jul 2017 Rainfall, Jul 2017 Rainfall - Average rain fall in July 2017 was
higher in all regions, 61.1 mm in the North (35%), 192.0 mm in the Northeast (91%), 97.5 mm in the Central (63%), 117.1 mm in the East (42%).
- For the next three months, it is expected rainfall will be 5% lower than average or 360 mm (average of 380 mm) in the North and 470 mm (average 490 mm) in the Central. While in the Northeast, rainfall is lower than average or around 380 mm.
- The weather remains favorable for cane and production could go from 107 to 110 million MT.
Source: Thai Meteorological Department
85000000
90000000
95000000
100000000
105000000
110000000
0
2000000
4000000
6000000
8000000
10000000
12000000
2014/15 2015/16 2016/17 2017/18f
Cane Raw White Total
Sugar Cane
Unit: MT
Share of Raw and White
source: Thai Sugar Millers Corporation
Cane and Sugar Strategy
2016 2024
Area 1.76 million HA 2.88 million HA
Cane 92.9 million tons 210 million tons
Sugar 10 million tons 21 million tons
CCS 10 12
Yield 62.5 tons/HA 75 tons/HA
Source: Office of Cane and Sugar Board
New Regime/New Challenge
On June 7, 2017, the Cane and Sugar Board approved the Draft Regulation of Cane and Sugar Board on Determination of Quantity of Sugar for Sugar Mills.
• The abolishing of sugar quota
• The Reference Price will be calculated on the basis of world market price.
• National Legislative Assembly has established the Sub-Committee on Amending the Cane and Sugar Act.
• Cane and Sugar Board tasked the OCSB, Cane and sugar Fund, cane growers and millers with developing a plan for legal amendment relating to the changes.
Millers’ position (in consistent with WTO commitment): • Abolishing of sugar quota • Floating price for domestic market (London No. 5 + Thai Premium)
New Regime/New Challenge
• Domestic Sugar/no quota
• TCSC’S Sugar
• Export Sugar
• Food Safety Stock @ 250,000 MT
Quota A Quota B Quota C
Challenging Factors / The Giant One • The new sugar regime
• Floating price
• Domestic market
• Consumption pattern
• Expansion
• Weather pattern
• Liberalization in ASEAN
• Indonesia – Australia FTA
• China’s import policy
• EU and other
Sugar Tax to be implemented from September 16, 2017
Existing Structure New Structure
Item Soda General Bev
Rate 25% of the CIF value or ex-factory price 20% of the CIF value or ex-factory price
Tax levy on sugar drinks capped at 20% with beverages containing more sugar carrying a larger tax burden than less sweet products. Non-alcoholic beverages containing sugar of lower than 10% will not be taxed.
Rates be divided into 3 categories: * 10 – 14% of sugar content * 14 – 18% of sugar content * 18% or higher
source: Excise Department
Expansion, will it possible?
• So far, 36 licenses for greenfield sugar mills have been approved by OCSB. • North 3
• Central 2
• Eastern 2
• Northeast 29
• Challenging factors • Environmental Regulation (EIA)
• Cane availability
• Possible effects from new sugar regime