Sugar price controls in Thailand may lead to shortages
By Jon Fernquest
Thailand
is the second
largest exporter of sugar in the world after Brazil but sugar shortages within the country are likely
this year.This seems counter-intuitive. Exactly why is this the case?
Price controls within the country set a price for sugar far below international prices so some exporters cheat and export sugar allocated for domestic markets.
Apparently, no one is enforcing the law, similar in a way to the rice storage situation in Thailand until Prime Minister Abhisit and his team fixed it (Read article, also see archives #1 and #2 for the long and painful history of failed rice subsidy programs).
Today's article begins after the vocabulary.
(Photo on right of ant eating a sugar crystal).
price
controls - government laws, regulations, and policy that
control (fix, limit) the prices of goods
การควบคุมราคาโดยรัฐบาล
intuition (noun) - a feeling that you have that something is true or how to do something, a feeling based on experience
intuitive (adjective) - based on intuitions (feelings gained from experience)
counter-intuitive - not what you would think or believe (going against your intuitions)
allocated - a part given from something larger
domestic - within the country
apparently,... - this looks or appears to be true,....
subsidy - when the government pays part of the cost of some activity
intuition (noun) - a feeling that you have that something is true or how to do something, a feeling based on experience
intuitive (adjective) - based on intuitions (feelings gained from experience)
counter-intuitive - not what you would think or believe (going against your intuitions)
allocated - a part given from something larger
domestic - within the country
apparently,... - this looks or appears to be true,....
subsidy - when the government pays part of the cost of some activity
Economics
SUGAR MARKET
Price caps could worsen shortfall
11/02/2010Sugar could be in short supply locally because capped domestic prices are now well below global prices, warns the National Food Institute (NFI).
The price of sugar in export markets has been skyrocketing since last year, when a drought in major exporter India caused domestic scarcity, said NFI president Amorn Ngammongkolrat.
price caps - upper
limits on prices (prices cannot go above these levels)
shortfall - an amount which less than level expected or needed จำนวนที่ขาดไป, ปริมาณที่ขาดไป
in short supply, scarcity - not enough available
domestic - relating to a person's own country ภายในประเทศ
well below - far below
global - throughout the world ทั่วโลก
drought - a long period of time when there is little or no rain ความแห้งแล้ง
shortfall - an amount which less than level expected or needed จำนวนที่ขาดไป, ปริมาณที่ขาดไป
in short supply, scarcity - not enough available
domestic - relating to a person's own country ภายในประเทศ
well below - far below
global - throughout the world ทั่วโลก
drought - a long period of time when there is little or no rain ความแห้งแล้ง
Sugar in Thailand is on the government's price-control list with a cap of 23.50 baht per kilogramme for refined sugar. As a result, some traders have been seeking to profit by buying sugar allocated toward the domestic quota and exporting it.
Sugar traders can earn 37 baht per kilogramme in the Philippines and 40 baht in Indonesia.
Thailand is the world's second largest sugar exporter after Brazil.
refined sugar - raw
sugar from the farm that has gone through a factory, packaged is ready
for sale in store
profit - money that you make from selling goods and services after all your costs have been paid กำไร
allocated - given to a use
quota - a fix amount that is allowed or required (examples; import quotas, production quotas, export quotas)
domestic quota - the amount that must be sold in domestic markets
profit - money that you make from selling goods and services after all your costs have been paid กำไร
allocated - given to a use
quota - a fix amount that is allowed or required (examples; import quotas, production quotas, export quotas)
domestic quota - the amount that must be sold in domestic markets
Because the El Nino weather effect is emerging this year, output of some key crops is falling. Sugarcane output for the current harvest season (October 2009 to early 2010) is estimated to be down to 7.1 million tonnes from 7.3 million the previous year. About 70% of the output is exported.
Sugar prices began rising early last year and have remained at or near 30-year highs since then. The world price in December averaged 23 US cents per pound, up 75% from the start of 2009. Prices for March delivery are currently quoted at 27.6 cents.
El Nino - a
worldwide weather pattern that occus on average every five years that
causes floods, droughts and other weather disturbances (See Wikipedia)
output - the amount of something produced ปริมาณ(กระแสไฟฟ้า)ที่ผลิตขึ้น
key - most important ที่สำคัญ
sugarcane, cane - one kind of plant that sugar comes from (See Wikipedia) อ้อย
current - of the present time ปัจจุบัน
harvest - gather and collect crops when they are finished growing and ready to eat เก็บเกี่ยว
estimated - the amount that is around the right amount (approximate) based on your calculation or guess
output - the amount of something produced ปริมาณ(กระแสไฟฟ้า)ที่ผลิตขึ้น
key - most important ที่สำคัญ
sugarcane, cane - one kind of plant that sugar comes from (See Wikipedia) อ้อย
current - of the present time ปัจจุบัน
harvest - gather and collect crops when they are finished growing and ready to eat เก็บเกี่ยว
estimated - the amount that is around the right amount (approximate) based on your calculation or guess
Many analysts expect the price will remain high through 2011 before declining in line with the cyclical nature of the sugarcane industry," said Mr Amorn
Rising demand for sugar and cane used in ethanol production globally is also eating into world supplies.
As well, El Nino is expected to affect Australia, Brazil, China, India and Thailand this year and they may face more dry conditions in sugarcane-growing areas.
The food and beverage industry is the hardest hit, compounding the impact of rising energy prices. "The operators in those industries should prepare themselves for the situation," he said.
in line with - following
line - position; a way of dealing with or thinking about something or someone
cyclical - every year during some periods the amount moves up and during other periods goes down
cyclical nature - this is part of the basic way it works
nature - the basic quality of feature of something ลักษณะที่แท้จริงของสิ่งต่างๆ, ธรรมชาติ
globally - throughout the world ทั่วโลก
eating into world supplies - using and reducing world supplies of sugar
beverage - a drink of any type เครื่องดื่ม
impact - an effect or influence ผลกระทบ
compounding - making a problem even bigger
operators - companies
line - position; a way of dealing with or thinking about something or someone
cyclical - every year during some periods the amount moves up and during other periods goes down
cyclical nature - this is part of the basic way it works
nature - the basic quality of feature of something ลักษณะที่แท้จริงของสิ่งต่างๆ, ธรรมชาติ
globally - throughout the world ทั่วโลก
eating into world supplies - using and reducing world supplies of sugar
beverage - a drink of any type เครื่องดื่ม
impact - an effect or influence ผลกระทบ
compounding - making a problem even bigger
operators - companies
The major sugar consumer in Thailand is the beverage industry, using 45% of total output, food 27%, milk products 19%, candy and sweets, pharmaceutical, baked goods and alcohol 2-3% each .
The main export markets for Thai sugar are Southeast Asia at 36%, Japan 13%, India 7% and Taiwan 6%.
A source from the Office of the Cane and Sugar Board said, however, that while a shortage may occur, it would be worse if consumers panic and hoard goods.
consumer
- someone who buys and uses goods and services ผู้บริโภค
pharmaceutical - connected with the production of medicines เกี่ยวกับเภสัชกรรม, เกี่ยวกับยา
source - someone who gives information แหล่งข่าว
shortage - when there is not enough of something การขาดแคลน
panic - a sudden strong feeling of fear or worry that causes you to be unable to think clearly or calmly
hoard - a large amount of something that someone has saved and hidden สิ่งที่เก็บสะสม
pharmaceutical - connected with the production of medicines เกี่ยวกับเภสัชกรรม, เกี่ยวกับยา
source - someone who gives information แหล่งข่าว
shortage - when there is not enough of something การขาดแคลน
panic - a sudden strong feeling of fear or worry that causes you to be unable to think clearly or calmly
hoard - a large amount of something that someone has saved and hidden สิ่งที่เก็บสะสม
(Source: SUGAR MARKET, Price caps could worsen shortfall, 11/02/2010, link)
