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18 Feb 2021 | 06:53 UTC — New York
By Brian Ng
Highlights
Proportion of burned cane above regulation threshold at 25.1%
Positive impact of higher sugar yield, reduce pollution
Shortage of labor puts pressure on cane crush pace
New York — A tight labor supply during Thailand's cane harvest, which typically starts from December and ends in April, has made it difficult for the sugar industry to achieve the 20% burned cane requirement set by the government in the current marketing season.
The purpose for the burned cane regulation was to improve air quality in an attempt to reduce crop burning in the country.
While government regulations have required sugar millers to procure at least 80% of fresh sugar cane from farmers, farmers often prefer to burn sugar cane as it is less laborious and time-consuming to harvest than manually shaving off the cane leaves.
As a result, an increase in the number of laborers will be required to keep up with the change in policy.
In addition, the difficulty of moving workers from one place to another, coupled with a reduction in the number of Cambodian and Burmese migrant workers due to the COVID-19 pandemic were among other factors cited by market sources.
According to a cane crush report seen by S&P Global Platts, the proportion of burned sugarcane as of Feb. 12 amounted to 25.1%, or 12.7 million mt -- higher than the 20% burned cane requirement set by the Thai authorities.
A Thai producer source said the policy would pose a challenge for the Thai sugar industry to change the way that cane harvesting is usually done.
"In the past, we were allowed to buy 50% of burned cane. But now, we have to get farmers to change the way they harvest and they are not familiar with harvesting fresh cane," the producer source added.
Most small-to-medium sized farmers would also be reluctant to invest in machinery such as sugarcane harvesters that enhance productivity, given the higher capital outlay needed to purchase such technology, trade sources said.
The shortage of manpower would also slow the pace of crush. As of Feb. 12, Thailand's cane crush volume was at 50.71 million mt since the beginning of the 2020/2021 crushing period, down 23% compared with the same period last year.
Several sources shared that the policy has significantly improved the sugarcane burning season compared with previous years, which could also bring about positive impacts such as a higher sucrose recovery and reducing environment pollution.
However, others believe the government regulation could be deemed ineffective going forward when there is higher sugarcane output available for crushing.
"Thailand has very low [cane] production this year, around 65 million to 70 million mt, due to bad weather. When the weather improves and cane supply is high, then we might find it hard to follow the 20% [burned cane] rule by the government," a Thai sugar trader said.
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