From 2011 to 2014, world sugar prices dropped by 40%. Yet during that same period, sugar exports from Thailand rose by 70%, solidifying Thailand’s position as the world’s second largest sugar exporter. And, further rapid sugar production expansion – 50% in five years – is planned.
Thai sugar producers are relatively inefficient compared with other major producers, such as leading exporter Brazil. The Thai sugar industry is hampered by inadequate moisture and poor cane quality, small farm size, lack of mechanization, and underutilization of cane mills. How, then, was the Thai sugar industry able to achieve such a production gain while world sugar prices were falling?
The answer is government intervention. The Thai government has been closely involved with the Thai sugar industry for decades, and has taken major steps to expand Thai sugar production and exports, regardless of world market pricing and needs.