News
Sugar crisis likely, huge stocks stuck at port
Sri Lanka could face a serious sugar shortage soon due to delays in the customs clearance of around 3,000 containers carrying stocks, sugar importers warned.
The containers have been held up at the Colombo Port for months because of suspicion after detection of containers carrying cocaine in sugar cargo. The delays were also due to the imposition of an additional import tax of Rs. 6 a kilo.
Custom officers have been carrying out a full inspection of sugar cargoes since the detection of a massive cocaine haul on June 14 last year and importers say this is causing long delays in clearance.
Some importers say they are reluctant to clear the old stocks due to the fear of contamination, as some 3000 containers have been stuck at the port with cocaine detections from time to time. A Custom officer said they were carrying out a full-scale, bag-to-bag examination of the sugar cargoes, but importers say the delay in clearing sugar cargoes has also led to huge demurrage bills.
On average, more than 2,000 containers of sugar come to the country every month. Importers have already stopped the imports from Brazil due to the fear of cocaine being smuggled in.
Adding a sour note to the sugar crisis, the Treasury has slapped a new levy of Rs. 6 a kilogram, taking the total tax to Rs. 13 a kilo.
Importers say that when they placed orders in August or September last year, the price of a metric tonne of sugar was US$ 630. These stocks arrived in the port in October-November and are still there for Customs inspection.
A kilo of imported sugar will cost around Rs. 110 if the stocks are cleared by paying the import tax of Rs. 13, traders say. The maximum retail price for sugar is Rs. 95 a kilo.
Importers say they would thus be unable to sell their new stocks though the world market price has now dropped to US $580 for a metric tonne.
Pettah wholesale traders are selling sugar at Rs. 93 at present but they say they may not be able to maintain this price and might have to increase it to to Rs. 100-Rs.105 a kilo.
Traders say there had to be a minimum profit margin of 10 per cent from the wholesaler to retailer as there were transport and other costs involved. They say fixing maximum retail price for sugar is impractical because of the widely varying prices in the world market.