May 4, 2023 11:48 AM
LETTER | I have been following the developments closely on the potential increase in sugar prices given the surge in global prices recently.
Raw sugar futures in the past few weeks had risen to 24 cents a pound, and reached an 11-year high.
About 80 percent of global sugar production comes from sugarcane, according to the International Sugar Organization, while 20 percent is derived from beets.
The upward trend in global prices of raw sugar, and the increasing cost of production to refine sugar, will mean that sugar prices will have to increase soon. It is just plain and simple logic.
It must be stressed that while sugar is a controlled item, it is not subsidised. It used to be but not since 2013.
Keeping prices low when global prices have shot up will just mean that the local sugar industry is either operating at a loss and in no time will collapse, or the government is using this opportunity to replace local refined sugar with imported processed sugar.
I do not think that the government will want to see the collapse of the sugar industry given the impact it has on employment and the entire supply chain.
Moreover, the reliance on imported processed sugar to meet domestic demand is unwise given that the government is committed to improving food security in the long run.
Just imagine, an event of geopolitical tension like Russia’s invasion of Ukraine, led to countries holding up their exports of essential food items such as wheat to build up a national stockpile, the same can be done by sugar-producing countries in the future.
This will mean that whenever there is a global conflict, sugar prices will shoot up or worse still we may run out of sugar. It will present a problem as Malaysia is the highest sugar consumer in Southeast Asia.
Back to the present, the likelihood of a sugar price increase has led many retail outlets especially those involved in the food and beverages industry to warn of a potential increase in prices.
This is worrying for a teh tarik fan like me. Already I am paying more than RM2 per glass in most mamak restaurants, and you will be hard-pressed to find it being sold below that price.
I find this ironic, given that despite sugar prices for Malaysian household consumers being relatively unchanged in the past 10 years, prices of beverages have increased multifold. Every time there is a hike in fuel prices or utilities, restaurants will use it as a timely excuse to increase their prices.
As a former restaurant operator, I know that beverages are where the high margins are made. The margin on the glass of teh tarik for example ranges from 100 to 300 percent.
Yet, Malaysian consumers seem not to bat an eyelid over the exorbitant amount we pay for beverages these days.
Another irony is the race for restaurants and eateries to offer “cheap meals” under the government’s Menu Rahmah programme. It goes to show that restaurants can, if they want to, cap prices.
Therefore, I sincerely hope that the imminent increase in sugar prices in the future, will not be used as an excuse by the restaurant operators to jack up prices.
Sibu Coffeeshop and Restaurant Owners Association chairperson Tong Ing Kok summed it well in a recent press conference saying that he has urged coffee shops not to increase prices given the existing prices of drinks are already high.
He was quoted by the press as saying, “A cup of kopi o peng with sugar is between RM2.20 and RM2.50. This price is already quite high. So one should not raise their prices just because the price of sugar will be increased.”
The Domestic Trade and Cost of Living Ministry should monitor these restaurant operators to make sure the prices are under control and the eateries do not take unnecessary advantage of the imminent increase in sugar prices.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.