Kuala Lumpur: Malaysian sugar producers face upcoming challenges in the coming months due to escalating energy, raw material, and transportation expenses, compounded by supply shortages as producing nations prioritize their domestic markets, reported Business Times.
Dr. Yeah Kim Leng, an economics professor at Sunway University, underscored the mounting financial pressures on manufacturers in Malaysia. They find themselves obliged to sell at regulated sugar prices amidst the sudden upsurge in raw sugar costs and other production outlays.
Given Malaysia’s heavy reliance on imported raw sugar, stakeholders must prepare for potential disruptions in the global sugar market. Dr. Yeah stressed the importance for firms to adequately stockpile, diversify their sources of raw sugar imports, and improve productivity and production efficiency while awaiting government intervention and consumer acceptance of prices closer to market rates.
Moreover, Dr. Yeah attributed Malaysia’s relatively low retail sugar prices among ASEAN nations and globally to government price regulations. He noted that cross-subsidies from exports, based on prevailing world market prices, have allowed sugar producers to maintain profitability until the recent sharp increase in global raw sugar prices.
Dr. Yeah also observed that sugar producers have been absorbing losses since the government ceased sugar subsidies. He highlighted the benefits to consumers from lower sugar prices in terms of reduced expenditure on sugar consumption and overall inflation. He suggested that the government may need to consider subsidizing producers or consumers to maintain current price levels or increasing administered sugar prices to prevent the collapse of distressed sugar producers.
