Likely hike in food prices: Sugar price increase, Govt no money to subside

Sunday January 9, 2011

Likely hike in food prices

By WONG PEK MEI and ISABELLE LAI
newsdesk@thestar.com.my

PETALING JAYA: Consumers may have to fork out more for their foodstuff now that several food and beverage industry players have been hit with a RM600 increase per tonne in the price of sugar.

Sugar refineries issued a notification on Dec 31, informing 17 manufacturers of the price increase effective Jan 1.

The price for coarse grain sugar is now RM2,540 per tonne, up from RM1,940, while that of fine grain sugar has risen to RM2,620 per tonne from RM2,020.

However, manufacturers have expressed surprise at the lack of an official government announcement.

Fraser and Neaves Holdings Bhd (F&N) chief executive officer Datuk Ng Jui Sia said he was confused, adding that the Government normally announced any increase before such a notification from suppliers.

“I understand the rationale for the price adjustment. The problem is that we received such short notice and had no time to plan or prepare for it,” he said, adding that he was also surprised that the change came a month before Chinese New Year.

Permanis chief executive officer Erwin Selvarajah said he was unaware of the price increase.

“I was merely informed of a meeting with the Domestic Trade, Cooperatives and Consumerism Ministry on Monday to discuss certain issues,” he said.

Federation of Malaysian Manufacturers president Tan Sri Mustafa Mansur confirmed that it would be having the dialogue.

“We want to get ministry clarification on the price increase. The 17 manufacturers want to discuss how it will be implemented,” he said.

A spokesman for one of the country’s four sugar refineries said the increase affected only a certain segment of the market.

“Only the biggest players are involved. A government announcement would only be made if the entire market was affected,” he said, adding that it was normal for a last-minute notification.

When contacted, ministry secretary-general Datuk Mohd Zain Mohd Dom said manufacturers had been warned that they might not be able to buy subsidised sugar any more in view of the rise in world sugar price.

He said the Government only had RM400mil left from the initial RM1.6bil fund to subsidise sugar at the current price of RM2.10 per kilo.

On the notification before Chinese New Year, he said the Government could not afford to spend so much money on sugar subsidies for another month if they waited until after the festival.