BANGKOK: Thailand, the world’s second largest sugar exporter after Brazil, is to overhaul its sugar production and distribution systems for the first time in more than three decades in order to avoid being challenged by Brazil at the World Trade Organization (WTO).
The move is unlikely to make any changes on the global sugar trade for at least in the next few years, government and industry officials said.
According to the Office of Cane and Sugar Board (OCSB), Thailand will have to revoke its current 70:30 profit-sharing system, in place since 1984, which will require cancelling its quota system and floating domestic sugar prices.
“The OCSB has finalised the plan to overhaul the sugar system and will submit the plan for cabinet approval within a few weeks,” said the OCSB’s secretary-general Somsak Jantararoungtong.
Sugar traders believe that this plan is solely strategic, put together to provide Thailand with a quick defence against accusations of foul play from Brazil at the October WTO meeting in Geneva.
Brazil is challenging Thailand over “subsidies” for sugar producers that it says have dragged down global prices and allow Thailand to win a larger market share at the expense of Brazilian producers, conduct that is not in line with international trade agreements.
“This is just a quick response to Brazil’s accusations. However, implementation of the changes on Thailand’s 70:30 profit sharing system will take at least a few years,” said a sugar trader at an international trading firm who asked not to be named.
