Tesco Rations Sugar In Malaysia As Price Surge

[churchill]

Sept. 4 (Bloomberg) -- Kuala Lumpur baker Serene Chin is having trouble keeping her egg tarts sweet. A sugar shortage prompted her local Tesco Plc hypermarket to impose a 2 kilogram- per-customer ration, forcing her to make several trips a week.

“This current shortage is really tiresome,” said Chin, who normally buys 48 kilograms at a time for her John King’s bakery. “Sugar is necessary for the people.”

Supplies of the sweetener are scarce in Malaysia because of a global shortage and a decades-old government price cap that encourages people to smuggle sugar across the border into Thailand, where it fetches double the price. Almost every vehicle stopped at the border is carrying controlled-price items like sugar and cooking oil, said Domestic Trade and Consumer Affairs Minister Ismail Sabri Yaakob. Customs has begun 35 investigations, more than twice the number last year.

“If you put a ceiling on local prices, when the difference between global and local prices widens, it makes no sense to retailers to sell sugar domestically,” said Suhaimi Ilias, chief economist at Maybank Investment Bank Bhd. in Kuala Lumpur. The government needs “more flexible price controls.”

Raw sugar futures have doubled this year to a 28-year high, after India, the biggest consumer, had its driest June in 83 years, reducing domestic supplies, and crops in parts of Brazil, the largest grower, were wrecked by rainfall four times more than normal. Malaysia spent 720 million ringgit ($204 million) on sugar subsidies this year, Ismail said.

World Shortage

World demand for sugar will exceed supply by as much as 5 million tons over the next 12 months, the International Sugar Organization estimates.

In Malaysia, the price is set at 1.45 ringgit per kilo, or 1.55 ringgit in the eastern states of Sabah and Sarawak. In Thailand, the world’s second-biggest exporter, it can fetch as much as 2.90 ringgit, Ismail said.

Malaysia introduced price controls on essential items in 1974 to ensure food security and cushion volatility in the commodities markets. To prevent a run on sugar in the shops during the monthlong peak demand period of Ramadan, which started Aug. 22, retailers are rationing supplies.

Enforcement agencies have stepped up border checks and wholesalers who are caught hoarding sugar will be stripped of their licenses and blacklisted, Ismail said. About 10 tons of sugar have been confiscated from people carrying the sweetener over the Thai border this year, the Customs Department said. Under the 1967 Customs Act, sugar smugglers face up to three years in jail or a fine of at least 100,000 ringgit, or both.

Ramadan Fast

In an effort to meet higher demand before Ramadan, when Muslims break their daylong fast with large meals at dinner, sugar refiners including Malayan Sugar Manufacturing Co., a unit of Robert Kuok’S PPB Group, and Central Sugar Refinery Sdn. Bhd. increased production 20 percent in August to 120,000 tons a month, Ismail said. The state compensates refiners for selling a set quota of sugar below cost, based on their 2008 sales.

No more than 10 percent of locally made sugar is exported, said domestic trade ministry Secretary-General Mohd Zain Mohd Dom. Manufacturers are slowing production as the subsidy for the year is running out, the Star newspaper said, citing Mohd Zain.

“If panic buying continues, no matter how much we load, sugar will run out in the shops,” said Ismail.

Ministry investigations show the black market price for sugar ranges between 1.50 ringgit and 1.70 ringgit, he said. The government has offered a reward of up to 10,000 ringgit to anyone with information on hoarders or smugglers.

Tesco Order

Food stores across the country are rationing sugar supplies of have run out, local newspapers reported. Tham Weng Tuck, grocery manager at the Tesco store, said supplies were less than ordered and may not be enough during the festive season.

“We may order 2,000 kilograms, but only 1,000 kilos are delivered,” said Tham.

Marlene Kaur, corporate affairs director for Tesco Malaysia, said the temporary 2kg ration was required by the government “to minimize any possible shortage of supply.”

Muhammad Sha’ani Abdullah, secretary general of the Federation of Malaysian Consumers Associations, said the government should set up a database so that subsidies go only to the poor and not to industries that use sugar in their products.

“We don’t agree with subsidies across the board because it is very wasteful and goes to the non-target groups,” said Muhammad Sha’ani. “Subsidies are given to provide a safety net for the lower-income groups.”

He suggested that sugar be sold at higher prices for bakeries and wholesalers, or that subsidies be given in the form of low-cost housing or cheaper public transport.

Subsidy Defense

Ismail dismissed any suggestion of removing subsidies. “The government gives subsidies to help the people,” he said.

Instead, he said, the government would step up efforts to stop the smuggling, including handing out leaflets to people crossing the border, informing them that it is an offence to take out large amounts of controlled price items.

Malaysians consume an average of 26 teaspoons of sugar a day, compared to 17 teaspoons in the 1970s, S. M. Mohamed Idris, president of the Consumers Association of Penang, said in a statement dated July 24.

“An increasing amount of sugar consumed by the public is in industrially prepared drinks and food,” said Mohamed.

Other price-controlled items in Malaysia include gasoline, diesel, wheat flour, white bread and cooking oil.

As for Chin, the sugar shortage has forced her to look beyond the hypermarkets and source the sweetener from suppliers who charge 1.70 ringgit per kilo, although the price of her egg tarts remain the same at 1.80 ringgit each.

“I have no choice but to pay more,” she said.

http://www.bloomberg.com/apps/news?pid=206...id=aBZgstqZHVvw

[lannarebirth]

Hopefully sugar will get expensive enough that most Thai restaurants will forego adding it to their otherwise delicious offerings.

Edited September 4, 2009 by lannarebirth

[12DrinkMore]

Hopefully sugar will get expensive enough that most Thai restaurants will forego adding it to their otherwise delicious offerings.

I'm with you on that.

Is there a single dish that they don't heap in the sugar and msg?

Even if you tell 'em not too, through sheer force of habit in goes a spoonful.

Thailand is heading towards Diabetesland.

[RKASA]

Like fat it makes things sell better, but its not as needed as much as it is just used.  I am Diabetic and have to explain all the time when ordering food.  If your not careful even Khoa pot gets two tablespoons.  As a result I tend to eat at the same place where they know me so I don't have to do that all the time.

[Carmine6]

Thought there was a price cap on sugar prices in Thailand as well. Didn't they resort to purchase limits a couple years ago to deal with a similar exporting out of Thailand?

[churchill]

Thai sugar millers expand capacity as prices soar

Cane production seen higher in next crop

* Thailand to export record amounts in 2009, 2010

By Apornrath Phoonphongphiphat

BANGKOK, Sept 4 (Reuters) - Thai sugar millers are expanding capacity to meet demand as world prices soar, industry officials and traders said on Friday, expecting farmers to grow more cane in response.

"The expansion is part of long-term plans as millers expect sugar prices to rise further because supply is likely to fall short of demand over the next few years," said a senior official at the Thai Sugar Millers Corporation Limited, which groups all 47 sugar millers in the country.

On Tuesday the government approved plans by five sugar millers to expand their crushing capacity by around 7,000 tonnes of cane each per year.

Taking that into account, Thailand's annual crushing capacity will rise to more than 84 million tonnes of cane.

Traders said the higher capacity and soaring world sugar prices should mean farmers grow more cane in the 2010/11 season. The crushing season usually starts in November and runs until the end of April.

Thailand is Asia's biggest sugar exporter.

In the current 2009/10 crop, it is forecast to produce around 7.6 million tonnes of sugar from around 72-76 million tonnes of cane, according to the Office of Cane and Sugar Board (OCSB).

"World sugar prices at around 20 cents per lb are fair and should encourage farmers to grow more cane in the next crop," said Prakit Pradipasen, chairman of the Thai Sugar Millers Corporation.

New York raw sugar futures, which set the global trend, hit a 28-1/2-year high of 24.85 cents per lb on Wednesday on fears about a fall in supply. Demand was rising as India, the world's biggest sugar consumer, was expected to import more sugar to offset falls in domestic production caused by a weak monsoon.

The key October raw sugar contract SBV9 fell 0.54 cent or 2.3 percent to finish at 23.14 cents per lb on Thursday.

Because of the strong demand, Thailand aimed to export a record 5.7 million tonnes in 2010, according to the OCSB.

It exported 4.9 million tonnes in 2008 and aims to sell around 5 million tonnes this year, which would set a record. [iD:nBKK372662]

The London-based International Sugar Organization (ISO) has forecast a global sugar deficit of 8.4 million tonnes in 2009/10. [iD:nL2138534] (Editing by Alan Raybould)

http://in.reuters.com/article/domesticNews...0090904?sp=true

-- Reuters 04/09/09

[churchill]

Where smuggling is more of a vocation than an offence

http://news.asiaone.com/News/AsiaOne%2BNew...904-165634.html