Thai sugar: New Asean export opportunity

With start of Asean Economic Community & low sugar prices worldwide, may be time to grab Asean market share from Brazil.

Map above of sugar production worldwide (Source: Wikipedia).

Click button to listen to Sugar Sales in Asean to download

Economics
COMMODITIES

Thailand urged to beef up sugar exports to Asean

13/06/2012
Nanchanok Wongsamuth

Thailand is being urged to increase sugar exports to Asean members to capitalise on regional economic integration, as supply from Brazil is expected to dwindle on lower price prospects, low margins and poor cash flow over the next two years.

"While greater integration within Asean will create new trade opportunities for regional producers, it will also create a more competitive environment in some markets that are currently protected, potentially threatening the more high-cost producers," said Gareth Forber of LMC International's sugar research team. 

There is an opportunity for Thailand to divert a greater proportion of sugar exports to Asean if exports from Brazil slow down. But it has to offer the quality of sugar demanded.

Most Asean countries plan to reduce tariffs on sugar to low levels or zero to 5% by either 2015 or 2018. From 2009-11, fellow Asean members received 44% of Thailand's sugar exports on average.

The country's cane output for the 2011-12 season totalled 97.98 million tonnes, yielding 10.2 million tonnes of sugar.

Exports may total 7.8 million tonnes this year.

The two largest importers - Indonesia and Malaysia - source sugar from Australia in addition to Brazil. 

Some 3 million tonnes enter Asean from outside the region each year, with Brazil accounting for 1.5 to 2 million tonnes.

Mr Forber said slowing growth in Brazilian sugar exports would suggest the product is being sold closer to home, creating more opportunities for Thailand to supply a greater proportion to Indonesia and Malaysia, supported by improved sugar quality.

Sugar millers in Thailand have pledged to produce a very high polarisation of 99.2 degrees from the 2012-13 crop year.

At present, Thai raw sugar for export has a polarisation of 96 to 97.99 degrees for shipment to Japan and a minimum of 98.5 degrees for other destinations.

Over the last couple of years, Thailand's quality has been improving, and there's no reason why the trend [of increased exports to the region] won't continue," said Mr Forber.

Malaysia levies zero duty on raw sugar imports, while Indonesia charges US$60 a tonne, implying a tariff preference for Thailand starting in 2015.

"However, history shows that governments will do what they can to try to push the deadline out, which would pose a challenge for Brazil," said Mr Forber.

Michael Whitehead, ANZ Bank's agribusiness director, said Thailand's sugar sector provides an example to other countries of how to tackle challenges, while there is also "a passion in the industry to make sure nothing holds it back."

He said the sector has studied ways to float sugar prices, which shows Thailand engages in "refreshing discussions" on the issue unlike other countries. 

(Source: Bangkok Post, Economics, COMMODITIES, Thailand urged to beef up sugar exports to Asean, 13/06/2012, Nanchanok Wongsamuth, link) 

Sugar Industry Vocabulary

urged - requested them to do, advised someone very strongly about what action should be taken วิงวอน

beef up - increase, make stronger 
beef up sugar exports - increase sugar exports

Thailand urged to beef up sugar exports to Asean

integration - the process of combining with others to create a single unit or system การรวมเข้าด้วยกัน, การผสมผสาน
greater integration within Asean

economic integration - when the economies of a group of countries work together more closely (come closer to being one economy)
regional economic integration

capitalise on - to gain from, to benefit from
capitalise on regional economic integration

expected - believe will happen คาดว่า (จะเกิดขึ้น)
dwindle - reduce in number ลดจำนวนลง

expected to dwindle
supply from Brazil is expected to dwindle

margins - profits
low margins - low profits

prospects - the possibility that things will happen, especially something good ความเป็นไปได้  (See glossary)
lower price prospects, low margins

cash - money เงินสด
cash flow - money entering and leaving an organization (that is available now to pay for things)

poor cash flow
poor cash flow over the next two years

Thailand is being urged to increase sugar exports to Asean members to capitalise on regional economic integration, as supply from Brazil is expected to dwindle on lower price prospects, low margins and poor cash flow over the next two years.

trade - the buying and selling of goods การค้าขาย
opportunities - situations where it is possible to do something that you want to do (See glossary)

trade opportrunities
trade opportunities for regional producers

competitive - involving competition มีการแข่งขัน

potentially - may happen; possibly เป็นไปได้ ที่อาจเกิดขึ้นได้
potentially threatening the more high-cost producers
potentially threatening

"While greater integration within Asean will create new trade opportunities for regional producers, it will also create a more competitive environment in some markets that are currently protected, potentially threatening the more high-cost producers," said Gareth Forber of LMC International's sugar research team. 

proportion - a percentage or fraction of the total amount
a greater proportion - a larger percentage of the total amount

divert - 1. make travel in a different direction or go to a different place เปลี่ยนเส้นทาง; 2. to use something for a different purpose เบี่ยงเบน
divert a greater proportion of sugar exports to Asean

trade - the buying and selling of goods
new trade opportunities
competitive environment

markets that are currently protected - markets that are difficult to export to (because of high tariffs and other barriers to trade)

There is an opportunity for Thailand to divert a greater proportion of sugar exports to Asean if exports from Brazil slow down. But it has to offer the quality of sugar demanded.

tariffs - taxes on imports (to make foreign goods less competitive in a country) พิกัดอัตราภาษีศุลกากร

reduce tariffs - decrease taxes on imports
reduce tariffs on sugar

fellow - used for talking about people who are similar to you or are in the same situation เพื่อนร่วมชะตากรรม
fellow Asean members

Most Asean countries plan to reduce tariffs on sugar to low levels or zero to 5% by either 2015 or 2018. From 2009-11, fellow Asean members received 44% of Thailand's sugar exports on average.

cane - Same as "sugar cane"
sugar cane - the plant that sugar comes from (See Wikipedia)

sugar cane output - the amount of sugar cane produced
the country's cane output

source sugar from Australia - search for and buy sugar in Australia

The country's cane output for the 2011-12 season totalled 97.98 million tonnes, yielding 10.2 million tonnes of sugar. Exports may total 7.8 million tonnes this year. The two largest importers - Indonesia and Malaysia - source sugar from Australia in addition to Brazil.   Some 3 million tonnes enter Asean from outside the region each year, with Brazil accounting for 1.5 to 2 million tonnes.

proportion - percentage
supply a greater proportion
supply a greater proportion to Indonesia and Malaysia

Mr Forber said slowing growth in Brazilian sugar exports would suggest the product is being sold closer to home, creating more opportunities for Thailand to supply a greater proportion to Indonesia and Malaysia, supported by improved sugar quality.

pledged - seriously promised to do something สาบาน

polarisation (pol) - an estimate of the sucrose content of sugar, sugar of 98 degrees pol would contain about 98% sucrose; sucrose content expressed as a mass percent measured by the optical rotation of polarized light passing through a sugar solution,  accurate only for pure sucrose solutions; moisture reduces the concentration of the sugar and this change in sugar concentration is determined by polarization measurement (Sources: #1, #2, #3)

produce a very high polarisation of 99.2 degrees

Sugar millers in Thailand have pledged to produce a very high polarisation of 99.2 degrees from the 2012-13 crop year.

raw - materials in their natural state before being processed or used in manufacturing; not cooked
raw sugar

destinations - places where a person is traveling to or goods are being sent to

At present, Thai raw sugar for export has a polarisation of 96 to 97.99 degrees for shipment to Japan and a minimum of 98.5 degrees for other destinations.

over the last couple of years

reason - an explanation of an event, why an event happened เหตุ ; เหตุผล ; สาเหตุ
there's no reason why ...

trend - a gradual change or development that produces a particular result ทิศทาง แนวโน้ม
the trend of increased exports to the region

Over the last couple of years, Thailand's quality has been improving, and there's no reason why the trend [of increased exports to the region] won't continue," said Mr Forber.

duty - tax on imports
tariff - tax on imports

levy - make someone pay a tax, put a tax on some good or activity
levies zero duty

charges - a payment that has to be made for something เงินที่เรียกเก็บ
preference - something that you want or like most ความต้องการ

Malaysia levies zero duty on raw sugar imports, while Indonesia charges US$60 a tonne, implying a tariff preference for Thailand starting in 2015.

deadline - a time or day by which something must be done เส้นตาย
push the deadline out - move the deadline to a later date

challenges - difficult tasks that require great effort สิ่งท้าทาย

pose - to create a dangerous or difficult situation; cause something, especially a problem or difficulty เป็นเหตุให้
pose a challenge

tackle - to make an organised and determined attempt to deal with a problem แก้ปัญหา จัดการกับปัญหา
tackle challenges

agribusiness - an agricultural and farming related business

sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
sugar sector

passion - a strong enthusiasm or interest ความชื่นชม หลงใหล

"However, history shows that governments will do what they can to try to push the deadline out, which would pose a challenge for Brazil," said Mr Forber. Michael Whitehead, ANZ Bank's agribusiness director, said Thailand's sugar sector provides an example to other countries of how to tackle challenges, while there is also "a passion in the industry to make sure nothing holds it back."

float prices - let prices move freely
float sugar prices

refreshing - making a person excited and interested; giving energy when tired
refreshing discussions

engages in - do an activity; be involved in an activity
engages in refreshing discussions

issue - matter; a subject that people discuss or argue about ประเด็น

He said the sector has studied ways to float sugar prices, which shows Thailand engages in "refreshing discussions" on the issue unlike other countries.