Sugar price hike: Who benefits?

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So the prices of sugar and petrol have gone up again. But who stands to gain?

This is the third time this year that the price of white refined sugar prices has been hiked. It was raised by 20 sen on 1 Jan and by 20 sen on 15 July. Now it’s going up another 20 sen to RM2.10 per kg. Okay, we all have to cut down on sugar for health reasons, but it’s going to have a spin-off effect on a host of other products like your coffee at the kopi tiam.

But who actually benefits? Only four refineries are allowed to import raw sugar into the country.

Chart courtesy of thestar.com.my

Robert Kuok exited from the sugar industry in Malaysia last October. His PPB Group’s sugar refining operations came under MSM and a joint venture with Felda – Kilang Gula Felda Perlis Sdn Bhd. These two outfits produced over 700,000 tonnes of refined sugar annually.

In a RM1.5 billion deal, Felda’s main commercial unit, Felda Global Ventures Holdings Sdn Bhd, bought over PPB Group’s entire sugar assets in Malaysia including a sugarcane farm in Perlis and PPB Group’s 20 per cent share in Tradewinds (M) Bhd.

Tradewinds, linked to the well-connected Syed Mokhtar Al-Bukhary, controls Central Sugars Refinery Sdn Bhd and Kilang Gula Padang Terap Bhd.

Now, will the higher prices result in savings in government subsidies on raw sugar imports or translate to higher profits for the refineries? Earlier this year, The Star reported:

It is estimated that Malaysia imports about one million tonnes of raw sugar a year, or 90% of its total requirement. Refiners in the country sourced their raw sugar needs through long term contracts negotiated by the Government with overseas suppliers.

Imported raw sugar price is set by the Government. By subsidising raw sugar prices, the Government is able to maintain domestic retail sugar prices in a volatile market….

PPB’s sugar business had been profitable in the past years, thanks in part to the price control mechanism and the group’s highly efficient commodity trading operations.

Recent annual figures for the year ended 31 Dec 2009 showed PPB’s sugar refining and cane business contributing RM1.4bil in revenue and RM283mil in earnings before interest and tax (EBIT) to the group. PPB’s EBIT margin was at an impressive 20% for the full year, according to HwangDBS Vickers Research.

No doubt the sale of the lucrative sugar business would leave a big gap in PPB’s income stream.

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Amy

Today we read from the newspapers that Petronas has made huge profits again and the BN government is taking 30% of it.

So I simply cannot understand why BN is still in deficit and to remove subsidies to burdent he rakyat.

We seems to forget that the petroleum extracted by Petronas belong to the rakyat in the first place.

huggies

Concur with DG 🙂

DG

Say here, say there….also cannot do much.
Save energylah folks…
Too much stress also cannot perform…so take it easy.

LeeZ

Gerakan K is a nincampoop!!!!

yezdi

Undemocratic control of essential goods & services = Totalitarinism.

SugarB

Ong Eu Soon, you sure or not sugar can perform better than Viagra?

CPL

Still waiting for someone to start a coffee shop which charges lower for a cup of coffee without sugar or less sugar But no one will do it as they will always use the sugar price increase to increase the drinks price. 20 sen per kg increase will end up 10 sen increase per cup

moo_t

ROFL. Gerakan K gave an article link that say otherwise. He say “FDA never approved stevia.”, but the title read : FDA Approves Stevia, Ends the Era of Oppression of this Herbal Sweetener.

Gerakan K

ROFL and take a cold bath before commenting,

Excerpt from the article:

…Technically, the FDA has only issued letters of “no objection” regarding companies’ self-affirmation of GRAS approval for stevia. In other words, the FDA hasn’t technically granted approval to stevia…

Andrew I

It doesn’t take a genius to figure out that by not objecting, approval is tacit. Obviously, the FDA wants to cover its own backside by not giving direct approval. Why do you think the heading is what is it?

It just shows what a shallow person you really are.

PPSB

k gerakan clearly is from BN barang naik.

moo_t

here come spin doctor gerakan k.

The unsafe unproven claim made by USA in 1985, old news. Japan can’t growth sugar cane so they decide to use stevia ,for more than 30 years. WHO confirmed stevia safety in 2006. and in 2009, FDA approved stevia. In fact, aspartame are unsafe compare to stevia, and the high frutose extract from corn make diabetes worst.

Gerakan K
tunglang

here come spin doctor gerakan k.
Another FALSE ranting by Gerakan K to fool the readers.
WHAT A SHAME! TELLING LIES IS HIS OCCUPATION (PAID BY YOU KNOW WHO?)….

Kaki pulau

Very interesting, this connection between diabetes, sex drive and sugar!! Sugar to cure diabetes… my relative should still be alive today and enjoying life if he took Eu Soon’s advice. Unfortunately, he is dead… so Eu Soon, may be you should re-think your theory. Cut down on cabohydrate, more like it. Yes, you should consider the street food vendors and the kopitiam because the price of kuih and your kopi will be going up, up, up! Soon you will have to stay at home for breakfast and pack your lunch for work and come home for dinner where you don’t… Read more »

FenceSitter

If the 20sen increase is because of reducing the subsidy, why pass it on straight to the consumer directly. And 100% of it every time? Why don’t the gov’t force the refineries absorb some of it? All these talk about social responsibility, my foot. Who is the gomen protecting? Where are the consumer protection NGOs?

kee

Gerakan K is so happy because the readers shower him with full attention, enough to get erotic, no need sugar, therefore, syabas to BN – gula naik !!! … Now, petrol also increase – syabas to BN !!! Let’s sell our car and take public transport, or even better, let’s do the walking, good exercise… The more we walk, the more healthy we are. The more healthy we are, the more sex drive we have, dont even need sugar… So, the new Sugar Boss can keep increasing the price of sugar with the blessing of our BN government… (GE13 is… Read more »

Halim

The National Automobile Policy of BN makes you buy more Proton with no plan to provide good public transportation except building all kinds of Sentral (KL Sentral, LarkIn Sentral, Penang Sentral… Gua Musang Sentral?) with the objective of enriching the cronies.

Now petrol price increase you also got no choice but to pay for petronas petrol.

Andrew I

Sorry, Anil. Penangites. It’s the alcohol.

Scorpion

Gerakan K, tell that to the makcik jual kuih along the roadside. Ever since, Kuok exited, sugar price is increasing and WILL KEEP INCREASING because of that greedy fellow and his UMMM NO sidekicks!

kingkong

Gerakan K

Where have you been? How is your Karaoke with the CHEAP Chairman of PPC? Plenty of side income with more ships bringing in raw sugar to Penang Port?

FYI, sugar in China is expensive because they use salt more than sugar. This why as chinese background, there is a saying Gerakan k eats more salt than rice. So sugar is more expensive in China. In malaysia will be eating more sugar than rice

AminGL

Gerakan K

Because you are crony of Baring Naik, that’s why u are damn rich, unlike us, the Rakyat who is suffering of the price hike. Get a life!

kee

Since … bought over from Robert Kwok, the price of sugar keep increasing…

they are sucking and bleeding the Rakyat…

let us vote for change if you are still not dead …

kee

sigh sigh sigh, harga barang/makanan semua naik, tetapi gaji remain low … my cousins from China, recently visited Malaysia and they all have got a shock when learned about our wages in Malasia !!! …, brain dead readers, they seem to go on and on and talk about how cheap a bowl of noodle in Malaysia or how cheap our petrol is or now how cheap our sugar and belacan are but they never realise (Oop!!! becos they are brain dead, how to think and realise???) how low our wages are!!! cant blame them actually as they had been sucked… Read more »

Naomei

No. I am for reductions in subsidy. It does not mean I am a supporter of BN, I just think things like sugar and oil should not be subsidized. Money spent on these things could be spent elsewhere. Last year we spent 7% GDP subsidizing oil alone, and we only spend less than 4% on healthcare (2006). Subsidies cause distortions to the economy. We should look at subsidies like coupons. Would you pay RM10 to buy a coupon for RM10 discount of sugar? Or would you rather just keep the RM10 to spend on whatever you like? I can understand… Read more »

Naomei

Okay I just realized how much Gerakan K got yelled at for his comment. So, to assure you that I am not a fan of BN I will be going on a anti BN rant. BN has been messing up our economy for years now. Look at proton. It is a pure waste of money. That is what happens when you mess with the economy with distortions by making something cheaper than it really is. I strongly feel that the reductions in subsidies should come with increase in other areas, maybe subsidies to encourage public transportation or more spending on… Read more »

Naomei

A decline in subsidies has been the reason for regime change in many countries.

I am all for BN losing their power.

I am only hoping that if PR really wins, we will give them support and leeway to fix the economy.

Naomei

PM dept and defense are not significant expenditures of our economy.

I am all for reductions in IPP subsidies. But anyone who is for reductions in cronysm and corruption would also be for reductions in IPP subsidies.

Naomei

I did not know they restrict the number of refineries in Malaysia. Why do they do that?

As far as I know, allowing more to come in helps competition, which is a good thing. Anyone care to explain why there is a limit?

huggies

Bcoz, tree huggers say it’ll pollute the environment. http://saifulislam.com/9765#comments

Naomei

I hope you do not see this as an insult. But China’s GDP per capita is about half of ours.

moo_t

China food manufacture now use Stevia as sugar replacement. Stevia are 250-300 times sweeter than sugar. That’s mean, 1 KG stevia = 250-300KG sugar. So it also save warehouse and transportation cost. As of year 2010, stevia cost range from 270 renmimbi/kg, or RM135/kg. Multiply 250 , RM135 = 250KG sugars. That’s mean China food manufacture only pay around RM0.54 per/kg for the same sweetness. ——————— China in land hot money are the main course of inflation. Despites with huge amount of US Forex, China government refuse to imports more commodities. Gerak K, if you know nuts about economy, go… Read more »

Gerakan K

OMG !!! China manufacturers using stevia as sugar replacement !!!

[1]…after receiving an anonymous industry complaint, the United States Food and Drug Administration (FDA) labeled stevia as an “unsafe food additive” and restricted its import. The FDA’s stated reason was “toxicological information on stevia is inadequate to demonstrate its safety.”…

Reference:
[1] Stevia (http://en.wikipedia.org/wiki/Stevia)

Ong Eu Soon

If you believe in diabetic then the price hike is a good news. The price hike is bad for me as I use sugar to treat diabetic and erectile dysfunction. The chinese generally have no urge to make love because of the way they cut down calories, sugar and rice consumption. You don’t need to take viagra to treat sexual impotent, a cup of sweet drink will help boost your energy. Most chinese suffered from serious lack of sugar due to their fanatic believe in diabetic. If you really have enough sugar in your body, you will not feel tired… Read more »

kingkong

Ah Soon Khor

Not only you have very good sex drive but also drive for demo cracy and local govern ment. So can you tell us how you have the drive for the latter?

Yang

Gerakan K,
What is the problem… you …. idiot

limko1

I just wonder why price of sugar was not allowed to increase much or frequently prior to the sale of sugar refineries by PPB, if you care to check back the price increase records over the years.

Gerakan K

RM2.1 per kg still the cheapest in the region.

What’s the problem ???

Try … China and look for the sugar price !!!

Andrew I

It’s a good thing you put K after Gerakan because if you ask Penangnites to K Gerakan, they’d say they did that on 308.

Comparing with China. Let’s see. Population? Ever heard of demand and supply, sugar bumps?

tunglang

Gerakan K,
What is the problem with you? Or this is the problem with you.
You seem to like price hikes for everything to do with leech cronies. You got kang tau ah? Which makes all of us suspect you talk big with no brain…

Talk is cheap, but talk with no brain or public concern is unpalatable… short of being brain dead cyber warriors or trolls …

In Hokkien: “Lu Kong Ha Meek Kam Puih?”. (What nonsense are you talking?)

ssbr

yeah dont forget to compare our salary to theirs