Market Giant: Thailand

Kingsman Asia Sugar Conference September 7 – 8, 2017

Andaz Delhi, India

by Pattarapong Pongsawasdi Deputy Managing Director

Buriram Sugar Public Company Limited BRR

Agenda

•Buriram Sugar Public Company Limited (BRR)

• Thai Sugar Industry

•2017/18 Crop Year

• The New Regime

•Domestic Market

• The Expansion

3

- Situated in the

Northeast of Thailand

- Sugar Mill: 24,000 TCD

- Three Co-generation

Plants with total

capacity of 29.7 MW

- One Fertilizer Plants

with 30,000 ton

production capacity

per annual

BRR

Cane fields within 40 km radius BRR

Mill

2016/17

2017/18

2017/18F 38,400 HA of Acreage 2,800,000 Tons of Cane Crushed

2016/17A 32,000 HA of Acreage 2,210,000 Tons of Cane Crushed

Source: Buriram Sugarcane Research and Development

Thai Sugar Industry 2016/17 crop year - 54 mills in operation

- Northeast 20 - Central 22 - North 8 - East 4

- With current crushing capacity of 1,200,000 TCD

- Growing areas: - 45% Northeast - 30% Central - 25% North

Source: Office of Cane and Sugar Board

THAILAND SUGARCANE ACREAGE & PRODUCTION

2 0 1 1 / 1 2 2 0 1 2 / 1 3

2 0 1 3 / 1 4 2 0 1 4 / 1 5

2 0 1 5 / 1 6 2 0 1 6 / 1 7

2 0 1 7 / 1 8 F

1.43 1.49 1.57 1.75 1.75 1.75 1.77

Unit: Mil hectare

2 0 1 1 /12 2 0 1 2 /13

2 0 1 3 /14 2 0 1 4 /15

2 0 1 5 /16 2 0 1 6 /17

2 0 1 7 /18F

97.98 100.00

103.66 105.96

94.05 92.90

107.00

Sugarcane

Unit: Million Metric Tons

10.25

10.02

11.29 11.30

9.78

10.00

11.00

Sugar

Unit: Million Metric Tons

Source: Office of Cane and Sugar Board

- Acreage expanded substantially - Favorable weather condition

Sugarcane is still one of the popular crops compared to others. It accounts for 8% of total agricultural land in Thailand.

Source: Office of Agricultural Economics, Ministry of Agriculture and Cooperatives

Monthly Rainfall, Jan – Jul 2017 Rainfall, Jul 2017 Rainfall - Average rain fall in July 2017 was

higher in all regions, 61.1 mm in the North (35%), 192.0 mm in the Northeast (91%), 97.5 mm in the Central (63%), 117.1 mm in the East (42%).

- For the next three months, it is expected rainfall will be 5% lower than average or 360 mm (average of 380 mm) in the North and 470 mm (average 490 mm) in the Central. While in the Northeast, rainfall is lower than average or around 380 mm.

- The weather remains favorable for cane and production could go from 107 to 110 million MT.

Source: Thai Meteorological Department

85000000

90000000

95000000

100000000

105000000

110000000

0

2000000

4000000

6000000

8000000

10000000

12000000

2014/15 2015/16 2016/17 2017/18f

Cane Raw White Total

Sugar Cane

Unit: MT

Share of Raw and White

source: Thai Sugar Millers Corporation

Export Markets

Source: AP Commodities

Cane and Sugar Strategy

2016 2024

Area 1.76 million HA 2.88 million HA

Cane 92.9 million tons 210 million tons

Sugar 10 million tons 21 million tons

CCS 10 12

Yield 62.5 tons/HA 75 tons/HA

Source: Office of Cane and Sugar Board

New Regime/New Challenge

On June 7, 2017, the Cane and Sugar Board approved the Draft Regulation of Cane and Sugar Board on Determination of Quantity of Sugar for Sugar Mills.

• The abolishing of sugar quota

• The Reference Price will be calculated on the basis of world market price.

• National Legislative Assembly has established the Sub-Committee on Amending the Cane and Sugar Act.

• Cane and Sugar Board tasked the OCSB, Cane and sugar Fund, cane growers and millers with developing a plan for legal amendment relating to the changes.

Millers’ position (in consistent with WTO commitment): • Abolishing of sugar quota • Floating price for domestic market (London No. 5 + Thai Premium)

New Regime/New Challenge

• Domestic Sugar/no quota

• TCSC’S Sugar

• Export Sugar

• Food Safety Stock @ 250,000 MT

Quota A Quota B Quota C

Challenging Factors / The Giant One • The new sugar regime

• Floating price

• Domestic market

• Consumption pattern

• Expansion

• Weather pattern

• Liberalization in ASEAN

• Indonesia – Australia FTA

• China’s import policy

• EU and other

Sugar Tax to be implemented from September 16, 2017

Existing Structure New Structure

Item Soda General Bev

Rate 25% of the CIF value or ex-factory price 20% of the CIF value or ex-factory price

Tax levy on sugar drinks capped at 20% with beverages containing more sugar carrying a larger tax burden than less sweet products. Non-alcoholic beverages containing sugar of lower than 10% will not be taxed.

Rates be divided into 3 categories: * 10 – 14% of sugar content * 14 – 18% of sugar content * 18% or higher

source: Excise Department

Expansion, will it possible?

• So far, 36 licenses for greenfield sugar mills have been approved by OCSB. • North 3

• Central 2

• Eastern 2

• Northeast 29

• Challenging factors • Environmental Regulation (EIA)

• Cane availability

• Possible effects from new sugar regime

Thank You