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Sharp sugar price dip in world market: No sweet news for Lankans
View(s):An increase in special levy has forced a price hike on sugar in the local market snowballing into upward revision of all sugar based products.
A cup of tea with milk went up yesterday by Rs 5. The increase in commodity levy from Rs 13 to Rs 23 from Wednesday is despite world market prices coming down. The trading price in international markets was around US dollars 450 – 460 per metric tonne.
Despite a drop in world sugar prices, Sri Lankans continue to pay more for sugar and sugar-based food items. Last year, Sri Lanka imported 651,181 metric tonnes of sugar, while local production rose by 10.9 percent to 62,048 metric tonnes from 55,972 metric tonnes in 2015, according to the 2016 Central Bank report.
The increase was recorded from the Pelwatte and the Sevanagala factories, but the output at the Gal Oya factory dropped by a massive 24 percent for the second consecutive year. The local sugar industry meets only ten percent of the country’s needs. Sri Lanka imports sugar largely from Thailand, India, Dubai, Colombia, Nicaragua and Guatemala.
According to a June 6, 2017 datelined Reuters report, global raw sugar prices slid to a 15-month low late last week and have fallen around 40 percent during the last eight months. Sugar Importers’ Association President Perakum Abeysekara said he saw no reason why sugar prices should go up because the effects of the tax increase were being negated by the falling world market prices.
He said he hoped the prices would stabilise in keeping with the current low world market prices and the local tax increase. “Currently a metric tonne is around 450-460 US dollars in the world market. The price decreased almost by US$ 100 a metric tonne in the world market during April and May,” he said.
But, the Sunday Times during a visit to the wholesale and retail markets found that the benefit of the world market price drop had not been passed on to Sri Lankan consumers. K. Palaniandy, president of the Colombo Traders’ Association, confirmed that the price of sugar in the Pettah market had increased. A Pettah trader told the Sunday Times that the price of a kilo of white sugar in a 50 kg bulk shot up to Rs 102 from Rs 96 this week. The price of brown sugar has also increased accordingly.
A Rajagiriya retail seller said he was now selling white sugar at Rs 110. It was Rs 105 a few days ago. But there is bitter and sweet news also from sellers of sugar-based food items. Sri Lanka Restaurant Owners national organiser Asela Sampath said they had decided to increase the prices of plain tea and milk tea by Rs. 5. Accordingly, plain tea will be Rs 20 and milk tea Rs 40.
However, some bakery owners said increasing the prices of sugar-based products would be unfair by the consumer. One bakery owner said that since only a very small amount of sugar was used in preparing a cup of tea, any price hike in the cup of tea had to be done in cents.
All Ceylon Bakery Owners’ Association president M. K. Jayawardena said the association would take a decision to increase the prices of their products only if the local sugar prices continued to rise.
He pointed out that the price of sugar had in the past two years had risen by Rs. 30-40, but said a price decline was expected. Voicing the concerns of consumers was Ranjith Vithanage, President of the National Movement for Consumer Right’s Protection. He said instead of increasing the commodity tax on sugar, the Government should take measures to increase the local sugar industry’s productivity.
He said that when taxes were increased, measures were also taken to protect the consumers from traders who disproportionately increase the price of sugar-based products. “Some businessman have increased the price of even a piece of milk toffee which were made weeks ago. The Government should intervene to check on such traders,” he said.
Mr. Vithanage said the removal of the controlled price on sugar had hit the consumers badly. Meanwhile, Health, Nutrition and Indigenous Medicine Minister Rajitha Senaratne welcomed the sugar price hike, saying it would help control diabetes in the country.
Recalling that in 2015 he called for higher taxes on sugar to control the spread of non communicable diseases, the minister said he supported tax hikes on food items that contain sugar, fat and salt.