Refiner: Price hike inevitable due to higher costs

PETALING JAYA: Non-price-controlled sugar is expected to rise as refiners say price rationalisation is inevitable due to high input costs.

Low production, compounded by poor weather and a growing demand, has affected the current prices of sugar, says Malaysia’s leading sugar refiner, MSM Malaysia Holdings Bhd.

“Price rationalisation is something that is inevitable in all products due to the higher input costs, including forex and sugar, and there is no exception to this,” said MSM group chief executive officer Syed Feizal Syed Mohammad yesterday.

“The rationalised prices would be reflective and closer to the prevailing market prices for sugar.”

Syed Feizal said the global sugar supply shortage – whereby high demand outstrips supply – is affecting sugar prices generally.

Weather has also been a main factor compounding the shortage besides the scarcity of land for sugar cane cultivation, he added.

“Now it has to compete with corn and cassava where the yield is more attractive.”

Syed Feizal said forex also comes into play as the ringgit has been traded lower against the US dollar in the past 12 months.

He added that the price rationalisation will continue not just for sugar but for other products as well.

Deputy Domestic Trade and Cost of Living Minister Senator Fuziah Salleh assured the people that the price rationalisation will not affect the prices of coarse and refined white sugar, also known as gula rakyat or the people’s sugar.

“There is no government price control on the wholesale 50kg sugar packs.

“The prices of the coarse and gula rakyat are however government-controlled and will remain at the ceiling price of RM2.85 per kg and RM2.95 per kg respectively,” said Fuziah, adding that Malaysia’s retail sugar price was the lowest among Asean countries.

She also assured that the country’s main sugar producers MSM and Central Sugar Refinery Sdn Bhd (CSR), which have been instructed to produce an aggregate coarse and refined sugar supply of 42,000 tonnes a month, will continue to do so.

MSM is to produce 24,000 tonnes a month while CSR is to produce 18,000.

“They must meet the 42,000 tonnes threshold a month and they must also report the amount of production on a daily basis. This is so that the ministry can keep track on whether the quota has been reached or otherwise.

“With every kilogramme of sugar they produce, they are doing so at a loss, but the government is still maintaining the ceiling price due to the current high cost of living situation,” she said yesterday.

Fuziah said to help the sugar refiners cross-subsidise the losses incurred from producing gula rakyat at a low ceiling price, the government had decided to allow refiners to sell a new sugar type, called the pure white refined sugar, with prices to be determined by market forces.

MSM started selling this sugar in May.

“This sugar is targeted towards a special market segment, or customers who can pay the premium price,” said Fuziah.

She added that there has been no consumer complaints on sugar over the past two weeks and that the government is constantly monitoring the situation.