Thai cane farmers will enjoy record earnings next season.
However, it could cost them more than ever to produce cane (11,000 THB/rai).
Cassava should also slightly pay more than cane, which may impact our production estimate.

Record Thai Cane Returns in 2021/22

We previously thought Thai farmers would receive 1,000 THB/mt for their cane next season.
However, having spoken to millers and farmers in Thailand, we now think will be it be at least 1,050 THB/mt, a new record.
We say “at least” as some have already been offered 1,300 THB/mt for delivering a higher proportion of fresh cane, which has not been burnt.

There’s a Problem Though…

It could cost Thai cane farmers a record 11,000 THB/rai to produce cane next season.
For newly planted cane this would equate to about 800 THB/mt of cane:
Farmers can usually harvest around 13-15mt of newly planted cane per rai.

The drought of 2019/20 and 2020/21 means Thai farmers had to plant more new cane than usual this season.
New planted cane should return more sugar and be more resilient to any dry weather.
But there is a trade-off:
Planting new cane costs more than using cane that has been cut and regrown (ratooned).
Farmers also like to apply more fertilisers to new cane to help boost agricultural yields.
However, high freight costs, and strong demand from other key producers (US, China, India) has driven up the cost of importing fertilizers.

42.2m tonnes (45%) of this should be newly planted, as opposed to ratooned (cut and regrown), cane.

The farmers therefore have a tricky decision to make as the returns for cane and cassava are very similar.
Farmers often get paid more for newly planted cane as the sucrose and agricultural yields tend to be higher.
However, cassava returns should hold strong on the back of strong Chinese demand.
We think cassava farmers could make 4,410 THB/rai next season, whilst cane farmers could make 4,047 THB/rai all in.
These figures represent the farmers’ total earnings after Government subsidies for fresh cane deliveries, strong sucrose yields (etc.) are considered.

On the one hand, cassava is a better option as it performs better in the face of drought.
It’s also an easier crop to manage as cane demands more land preparation, fertilizer, and pesticide.
However, the perk of planting cane is that can be ratooned (cut and regrown) at least 2-3 times, when it’s farmed correctly, and the weather behaves.
This reduces costs for year 2 onwards and may make cane a more profitable crop in the longer term.