By Maheesha Mudugamuwa
Concerns have been raised over the recent confusion over sugar prices, with the sudden reduction of tax imposed on sugar and the Government’s inability to pass on the benefit to the public.
On 13 October, the Government scrapped the import duty on several essential items including dhal, canned fish, big onions, and sugar.
Accordingly, a kilogramme of sugar was expected to be sold at Rs. 85. However, the prices did not reduce even almost a month since the tax was reduced. As a result, the Government was urged to gazette the wholesale and retail sugar prices.
Earlier in the week, the Consumer Affairs Authority (CAA) issued a gazette notification outlining the wholesale and retail prices of white sugar that was to come into effect from 10 November.
The gazette states that the CAA, functioning under the powers vested in it by Section 20(5) of the Consumer Affairs Authority Act No. 09 of 2003, orders that no importer, distributor, supplier, or trader shall sell, expose, offer, or display for sale or supply for sale white sugar above the maximum price.
Accordingly, the maximum retail price (MRP) of packed white sugar was set at Rs. 90 per kilogramme and unpacked white sugar at Rs. 85 per kilogramme, while importers’ maximum wholesale price (MWP) was set at Rs. 80 per kilogramme.
Nevertheless, as alleged by the consumers, sugar was not available at local markets for the prices gazette by the CAA.
The benefit vanished?
Speaking to The Sunday Morning, Association of Sri Lanka Canteen Owners (ASLCO) President Asela Sampath said that the benefit of the price reduction was not passed on to the people.
“Sugar for the controlled price is only available at Sathosa outlets. There are only around 500 outlets and our members cannot find sugar at that rate anywhere else. There are over 500,000 hotels and restaurants and the members cannot purchase sugar at that price. Sugar is still sold at Rs. 135 at grocery stores. If we get sugar for controlled prices, we will reduce the prices of bakery and sugar-related products,” Sampath stressed.
It is now said that 90,000 MT of sugar had been imported to the country when the import duty was scrapped, and that the importers had to pay around Rs 4.5 billion to clear their consignments, he stressed.
He challenged Minister of Trade Dr. Bandula Gunawardana to find out whether the prices of sugar were reduced according to the gazette notification in the local market.
“It is still a question as to why such huge amounts of sugar were imported during this period and why the Government suddenly reduced the prices without issuing the price reduction in a gazette,” Sampath said, adding that it was the responsibility of the CAA to investigate if the price reduction has been passed on to the public.
The ASLCO President also alleged that the price reduction only helped limited businessmen but not the public or retailers.
Also highlighting the issues faced by the consumers, National Movement for Consumer Rights Protection (NMCRP) Chairman Ranjith Vithanage alleged that the time period taken by the Government to gazette the reduced prices still left questions remaining as to whether it was trying to help a few large-scale businessmen.
“The consumers had to wait a month since the prices were reduced to get the benefit, but still only a few have benefitted,” he added.
Meanwhile, Minister of Trade Dr. Gunawardana said that a tax will be imposed on sugar if the benefit of its price reduction is not passed on to the public. He has been quoted in media reports saying that there is no point of scrapping taxes if the benefit is not passed on to the people.
“Since doctors and other entities are saying that sugar must not be sold at low rates to the people, we will request the imposition of the taxes again,” the Minister had warned.
According to the daily price report issued by the Central Bank on 11 November, it is stated that the wholesale price of white sugar in Pettah was Rs. 100 per kilogramme.
A different story
The Sunday Morning noticed that the prices have come down to Rs. 100 from Rs. 125 per kilogramme from the previous day (9), but it is yet to match the prices stated in the gazette.
Even though fingers were pointed at the importers, claiming that they have earned a huge profit from selling sugar at higher rates, despite the tax being reduced by Rs. 49.75, the importers have a different story to tell.
As told to The Sunday Morning, the importers have been releasing stocks brought down to the country before the reduction of the tax and since they have already paid the taxes by then, they were unable to sell their stocks at the new rates suggested by the Government.
Several importers, who wished to remain anonymous, questioned as to why the Government reduced the taxes and created an issue within the country at a time when world sugar prices are increasing rapidly.
As learnt by The Sunday Morning, sugar is being imported to the country mainly from Brazil, Guatemala, India, and several other countries as well. However, after the drug issue popped up in Brazilian sugar, local importers ceased importing sugar from South American countries.
At that time, the Indian crop was massive and it has been maintaining an excess for the last three to four years due to the high production. Therefore, at present, sugar is mainly being imported from India.
It is further learnt that the bottom price of sugar at present is nearly $ 390 per tonne. But in case India stops releasing the excess to the market, the price could go up by a rate of more than $ 600 per tonne within a month.
However, the importers are waiting till India announces whether to continue with the export subsidy for the new season or not. If the Indian Government is not giving the export subsidy for new crops, the price will go up by another over $ 600-700 per tonne.
Therefore, the importers questioned as to why the Government of Sri Lanka removed the duty when the world market price is around $ 390 per tonne.
However, when contacted by The Sunday Morning, Essential Food Commodities Importers’ and Traders’ Association (EFCITA) President G. Rajendran said that importers have 90,000 MT of stocks imported with the tax and another 24,000 MT without the tax.
“With the tax, the imported cost is around Rs. 125 per kilogramme. We have agreed to give 50% of the commodity to Sathosa to sell at Rs. 85. But if the Government asks us to sell the entire stock at Rs. 85, we will face a huge difficulty,” he stressed.
The members of the association on Wednesday (11) had agreed to provide 50% of white sugar stocks for Rs. 85 per kilogramme to Sathosa.
“As the EFCITA President, I can’t insist on them (member importers) selling their stocks by incurring losses,” he stressed.
Meanwhile, commenting on the issue, Minister of Trade Dr. Gunawardana told The Sunday Morning that the decision to remove the tax on sugar was taken by the Ministry of Finance and they did not get in touch with the Ministry of Trade prior to taking the decision.
“The sugar prices were reduced to avoid a certain group of businessmen earning huge profits,” he said, adding that the CAA should monitor whether the prices have been reduced as per the recent gazette notification.
Indian imports
As per Indian media reports citing the National Federation of Co-operative Sugar Factories Ltd. (NFCSF), India’s production from 1 October to 5 November climbed to 425,000 MT, up 32% from the previous year. Speculation heightened indicating that India may export as much as six million tonnes this season, easing a global deficit that has supported prices.
In the meantime, Indian Minister of Commerce and Industry Piyush Goyal has been quoted as saying that the Indian Central Government is not considering an extension of its export subsidy for the 2020/21 sugar season. The Indian sugar industry has warned of a “vertical collapse” in the sector due to excessive stock – the ramifications of which may be felt in the years to come. Reportedly, this has been cited as the issue that has shaken the sugar industry before the start of an otherwise good season.
According to the United Nations Comtrade International Trade Database, Sri Lankan imports of sugars and sugar confectionery amounted to $ 257.48 million in 2017.
Earlier in the week, the Consumer Affairs Authority (CAA) issued a gazette notification outlining the wholesale and retail prices of white sugar that was to come into effect from 10 November.
The gazette states that the CAA, functioning under the powers vested in it by Section 20(5) of the Consumer Affairs Authority Act No. 09 of 2003, orders that no importer, distributor, supplier, or trader shall sell, expose, offer, or display for sale or supply for sale white sugar above the maximum price.
Accordingly, the maximum retail price (MRP) of packed white sugar was set at Rs. 90 per kilogramme and unpacked white sugar at Rs. 85 per kilogramme, while importers’ maximum wholesale price (MWP) was set at Rs. 80 per kilogramme.
Nevertheless, as alleged by the consumers, sugar was not available at local markets for the prices gazette by the CAA.
The benefit vanished?
Speaking to The Sunday Morning, Association of Sri Lanka Canteen Owners (ASLCO) President Asela Sampath said that the benefit of the price reduction was not passed on to the people.
“Sugar for the controlled price is only available at Sathosa outlets. There are only around 500 outlets and our members cannot find sugar at that rate anywhere else. There are over 500,000 hotels and restaurants and the members cannot purchase sugar at that price. Sugar is still sold at Rs. 135 at grocery stores. If we get sugar for controlled prices, we will reduce the prices of bakery and sugar-related products,” Sampath stressed.
It is now said that 90,000 MT of sugar had been imported to the country when the import duty was scrapped, and that the importers had to pay around Rs 4.5 billion to clear their consignments, he stressed.
He challenged Minister of Trade Dr. Bandula Gunawardana to find out whether the prices of sugar were reduced according to the gazette notification in the local market.
“It is still a question as to why such huge amounts of sugar were imported during this period and why the Government suddenly reduced the prices without issuing the price reduction in a gazette,” Sampath said, adding that it was the responsibility of the CAA to investigate if the price reduction has been passed on to the public.
The ASLCO President also alleged that the price reduction only helped limited businessmen but not the public or retailers.
Also highlighting the issues faced by the consumers, National Movement for Consumer Rights Protection (NMCRP) Chairman Ranjith Vithanage alleged that the time period taken by the Government to gazette the reduced prices still left questions remaining as to whether it was trying to help a few large-scale businessmen.
“The consumers had to wait a month since the prices were reduced to get the benefit, but still only a few have benefitted,” he added.
Meanwhile, Minister of Trade Dr. Gunawardana said that a tax will be imposed on sugar if the benefit of its price reduction is not passed on to the public. He has been quoted in media reports saying that there is no point of scrapping taxes if the benefit is not passed on to the people.
“Since doctors and other entities are saying that sugar must not be sold at low rates to the people, we will request the imposition of the taxes again,” the Minister had warned.
According to the daily price report issued by the Central Bank on 11 November, it is stated that the wholesale price of white sugar in Pettah was Rs. 100 per kilogramme.
A different story
The Sunday Morning noticed that the prices have come down to Rs. 100 from Rs. 125 per kilogramme from the previous day (9), but it is yet to match the prices stated in the gazette.
Even though fingers were pointed at the importers, claiming that they have earned a huge profit from selling sugar at higher rates, despite the tax being reduced by Rs. 49.75, the importers have a different story to tell.
As told to The Sunday Morning, the importers have been releasing stocks brought down to the country before the reduction of the tax and since they have already paid the taxes by then, they were unable to sell their stocks at the new rates suggested by the Government.
Several importers, who wished to remain anonymous, questioned as to why the Government reduced the taxes and created an issue within the country at a time when world sugar prices are increasing rapidly.
As learnt by The Sunday Morning, sugar is being imported to the country mainly from Brazil, Guatemala, India, and several other countries as well. However, after the drug issue popped up in Brazilian sugar, local importers ceased importing sugar from South American countries.
At that time, the Indian crop was massive and it has been maintaining an excess for the last three to four years due to the high production. Therefore, at present, sugar is mainly being imported from India.
It is further learnt that the bottom price of sugar at present is nearly $ 390 per tonne. But in case India stops releasing the excess to the market, the price could go up by a rate of more than $ 600 per tonne within a month.
However, the importers are waiting till India announces whether to continue with the export subsidy for the new season or not. If the Indian Government is not giving the export subsidy for new crops, the price will go up by another over $ 600-700 per tonne.
Therefore, the importers questioned as to why the Government of Sri Lanka removed the duty when the world market price is around $ 390 per tonne.
However, when contacted by The Sunday Morning, Essential Food Commodities Importers’ and Traders’ Association (EFCITA) President G. Rajendran said that importers have 90,000 MT of stocks imported with the tax and another 24,000 MT without the tax.
“With the tax, the imported cost is around Rs. 125 per kilogramme. We have agreed to give 50% of the commodity to Sathosa to sell at Rs. 85. But if the Government asks us to sell the entire stock at Rs. 85, we will face a huge difficulty,” he stressed.
The members of the association on Wednesday (11) had agreed to provide 50% of white sugar stocks for Rs. 85 per kilogramme to Sathosa.
“As the EFCITA President, I can’t insist on them (member importers) selling their stocks by incurring losses,” he stressed.
Meanwhile, commenting on the issue, Minister of Trade Dr. Gunawardana told The Sunday Morning that the decision to remove the tax on sugar was taken by the Ministry of Finance and they did not get in touch with the Ministry of Trade prior to taking the decision.
“The sugar prices were reduced to avoid a certain group of businessmen earning huge profits,” he said, adding that the CAA should monitor whether the prices have been reduced as per the recent gazette notification.
Indian imports
As per Indian media reports citing the National Federation of Co-operative Sugar Factories Ltd. (NFCSF), India’s production from 1 October to 5 November climbed to 425,000 MT, up 32% from the previous year. Speculation heightened indicating that India may export as much as six million tonnes this season, easing a global deficit that has supported prices.
In the meantime, Indian Minister of Commerce and Industry Piyush Goyal has been quoted as saying that the Indian Central Government is not considering an extension of its export subsidy for the 2020/21 sugar season. The Indian sugar industry has warned of a “vertical collapse” in the sector due to excessive stock – the ramifications of which may be felt in the years to come. Reportedly, this has been cited as the issue that has shaken the sugar industry before the start of an otherwise good season.
According to the United Nations Comtrade International Trade Database, Sri Lankan imports of sugars and sugar confectionery amounted to $ 257.48 million in 2017.