Refineries’ action may have caused shortage

STAR, Tuesday August 18, 2009

PETALING JAYA: The current sugar shortage situation may have been caused by refineries cutting back production after over-selling the commodity in the first six months of this year, according to the Domestic Trade, Cooperatives and Consumerism Ministry.

The ministry’s secretary-general Datuk Mohd Zain Mohd Dom said the four sugar refineries in the country could have slowed down on their production last month to cut losses as they had surpassed their subsidy quota.

Mohd Zain explained that the Government had agreed to subsidise a total of 100,000 metric tonnes of sugar sold per month by the refineries, amounting to 1.2 million metric tonnes of sugar for this year.

“They had over-produced and sold 70,000 metric tonnes in the first half of the year, surpassing the amount approved for this year’s subsidy.

“In order to cut losses, they may have cut back on production and thus created a gap in the supply chain,” he said when contacted by The Star yesterday.

However, the ministry met the sugar refineries last month. “We have instructed them to increase the supply by 20% this month and 10% in September to meet the demand for the festive season,” he said.

One of the refineries, when contacted, admitted that there was an over-selling of sugar in the first six months of this year.

“We only respond to the market supply. Nevertheless, we did not cut down on supply. We are responsible people and we have been working together to overcome the shortage of sugar,” a spokesman of the refinery who declined to be identified said.

Mohd Zain attributed other factors such as hoarding, smuggling and panic-buying among consumers for the shortage.

“There is speculation that the Government would increase the price of sugar, but it is not true. People are using the rumours to stock up and make a quick profit.

“The public should not believe such rumours and panic-buy. They should also report to the ministry about those who hoard or smuggle sugar,” he said, adding that ministry had acted against the culprits.

He cited cases where two wholesalers who were caught hoarding sugar and another in Perak who was caught selling sugar at a blackmarket price of RM1.80 per kg as opposed to the approved price of RM1.45 per kg.

“Last week, the customs stopped three cars for smuggling sugar in 10 minutes. Can you imagine how much sugar is being smuggled out in a day?”, he asked.