SUGAR, SUGAR, WHERE ART THOU?

August 11, 2009 12:26 PM

By Melati Mohd Ariff

KUALA LUMPUR, Aug 11 (Bernama) - Usually when shoppers visit a hypermarket, they expect to be able to find and buy goods from a wide range of items offered there.

However a friend's recent shopping trip to a hypermarket ended in disappointment when she found the shelves for sugar to be 'bare'.

What she had experienced was the same that befallen consumers in other states like Perlis, Kedah, Kelantan and Sabah who became desperate 'sugar hunters'.

After two days of futile merry-go-round search for this item, the friend gave up and returned home empty-handed.

The quandary of sugar supply shortage is rearing its ugly head in the country again, similar to what had happened in the past years.

When facing this crisis, consumers should deal with the situation wisely and should refrain from committing panic buying of this item as such an act would only worsen the state of affairs.

But, in the consumers' mind, a poser is likely to linger on.

Why the sudden shortage of sugar? Particularly with the fasting month of Ramadan being around the corner as well as the ensuing Hari Raya festive occasion.

PROFIT TAKING

The public may arrive to their own conclusion that some unscrupulous parties are creating a sort of 'an acute artificial shortage' of sugar with the hope of reaping hefty profit within a short period.

Anyhow, the rather 'porous' international borderline between Malaysia and its neighbours has made it easy for the smugglers to move out the commodity for a quick profit.

According to a recent news report from Padang Besar, it was found to be quite easy to obtain the Malaysian subsidised sugar in a country up north the Perlis border.

What an irony is that?

The state known for the 'Gula Perlis' is facing an acute shortage of this commodity?

The report said that there were syndicates smuggling Malaysian sugar out via land and sea routes at the Perlis-Thailand border.

Why smuggle sugar out?

The answer is simple, as sugar fetches the price of RM2.50-RM2.90 a kg in Thailand as compared to the very cheap RM1.45 for a kg of the item in Malaysia.

The price of sugar was also reported to be much higher in the Philippines, Indonesia and Singapore.

Minister for Domestic Trade, Co-operatives and Consumerism (MDTCC) Datuk Seri Ismail Sabri Yaakob, quoted in news reports as saying that the sugar shortage was not due to the lack of supply but was created due to work of smugglers and consumers panic buying.

RECURRENT ISSUE

Be it fact or fiction, the sugar shortage is causing problems to consumers particularly those from the lower income group.

The chief executive for the Federation of Malaysian Consumers Association (Fomca), Mohd Yusof Abdul Rahman, has this to say:

"Each year, the issue over shortage of daily essential items like sugar, flour and the like is bound to occur. Consumers are faced with the short supply of these goods particularly when the festive seasons are round the bend".

Mohd Yusof said the recurrent sugar shortage could be due to the work of a 'cartel' that controls the country's sugar industry.

"There is a possibility that there is an arrangement to determine the sugar price and supply in the local market.

"So are the networks of distribution that come under the control of certain groups.

"As long as the industries on basic essential items are being monopolised, such situation (shortage) is bound to happen," he told Bernama here.

SUBSIDISED SUGAR

According to Mohd Yusof, the shortage frequently hit the subsidised sugar.

This sugar is actually for the domestic consumers and not for traders like the hawkers and kuih sellers, what more for the operators of the small and medium-scale enterprises (SMEs).

Therefore, the government has to pay the sugar producers in order to subsidise this price.

He said in the Mini Budget tabled in Parliament last March 10, the government allocated RM674 million worth of subsidies for daily essentials like sugar, bread and wheat flour.

To ensure that this allocation is well regulated, the government had fixed a certain quota for the production of subsidised sugar.

During normal times, this quantity is 100,000 tonnes a month, he said.

But this quota is insufficient to meet the demand that usually surges prior to festive seasons.

Hence, the government via the MDTCC needs to be pro-active with the recent development of the local sugar industry and step up the production of subsidised sugar whenever it is necessary.

For the record, in a move to deal with the sugar shortage, the ministry has directed producers to boost their output by another 20,000 tonnes a month.

According to Ismail Sabri, the trend for demand of sugar during the festive seasons has increased from 3,500 tonnes to 4,000 tonnes a day.

There are four major sugar producers in the country -- Central Sugar Refinery Sdn Bhd in Selangor, Kilang Gula Felda Perlis Sdn Bhd (KGFP), Kilang Gula Padang Terap in Kedah and Malayan Sugar Manufacturing Co Bhd (MSM) in Prai.

SMEs AND TRADERS

Traditionally, the demand for sugar would surge prior to festive seasons and during this time, the SMEs and petty traders need a lot of sugar to meet their production.

As the production of subsidised sugar has a certain quota, definitely an imbalance in the sugar supply and its shortage is bound to happen.

According to Mohd Yusof, for bulk orders, the SMEs and petty traders would purchase their sugar supply from the wholesalers or sugar mills but the price they have to pay is higher than that for subsidised sugar.

"So it is no surprise if the SMEs and petty traders source their supplies from grocery stores and other places.

"If they buy in huge quantities, then definitely a shortage would happen as the subsidised sugar has a certain production quota," he said.

There is also a possibility that the sugar suppliers and wholesalers are selling the subsidised sugar direct to the industries at a price, which is slightly lower than the industrial price, for a quick profit.

In this context, Mohd Yusof calls on the authorities to step up their watch on the production and distribution of subsidised sugar to ensure that the commodity reaches the retail market.

Stricter and more consistent measures should be implemented in the effort to prevent subsidised sugar from being smuggled out of the country particularly into Thailand.

The news on the authorities' seizure of some 24 tonnes of sugar valued at RM32,000 from a warehouse in Jejawi near Kangar, Perlis recently showed that sugar was being hoarded before being 'shipped out' abroad.

Earlier, the General Operations Force (GOF) thwarted an attempt to smuggle out eight tonnes of sugar worth RM17,600 in a raid held near Pengkalan Kubor in Kelantan.

The above cases showed that the authorities should comprehensively and sternly deal with any attempts to smuggle the subsidised commodity out from this country.

At the same time, severe and harsh sentence must be taken on parties that attempted to hoard sugar or disrupt the commodity's supply.

FOMCA'S CALL

A practical solution for this issue is to open up the sugar industry to others, instead of being monopolised by certain parties.

Mohd Yusof said the same should be done on the import of raw sugar (sugarcane).

He also welcomed the positive statement made by Ismail Sabri on the tabling of the draft for the Consumers Competition Bill in the Parliament end of this year in an effort to curb the practice of monopoly.

With the enforcement of this law, the authorities would be able to regulate and place a check on the monopoly of industries particularly that on daily essentials by certain companies that has place a burden on the public.

This law would also enable the government to curtail any move by a cartel or group of companies to determine the price of certain items in the market.

Mohd Yusof also calls for a mechanism to ensure that the subsidised sugar is sold only for the truly domestic consumers.

"Among the measures is to impose a quota on the sale of subsidised sugar at retail stores like allowing a customer to buy only 2kg of sugar a day.

"For those who wish to buy in larger quantities, they can get their supply from the hypermarkets that obtain the item direct from producers or wholesalers," said Mohd Yusof.

Another of Fomca's suggestion is for the government to review the sugar subsidy.

Mohd Yusof said at present the subsidy is enjoyed by all, regardless of their income and financial standing.

He said the subsidy should be given only to certain groups like those from the lower-income group or middle-income earners who have many to support.

CONSUMER AWARENESS

Mohd Yusof wants consumers in the country to be made aware that they should reduce the amount of their daily sugar consumption.

He said such a move is necessary, as Malaysians are known to be excessive in their sugar consumption.

"On the average, an individual consumes 25 table spoons or 125 gm of sugar daily and this is equivalent to 750 table spoons or 3.75 kg of sugar a month.

"Excessive consumption of sugar has resulted in 3.6 million Malaysians being diagnosed as diabetics," he said, adding that an individual is recommended to consume not more than 10 teaspoons or 50 gm of sugar a day.

Definitely, we do not wish to be like the ants as the Malay saying goes "Mati Semut Kerana Gula" (The Ant Dies Because Of Sugar).

--BERNAMA