The government made savings of RM2bil from the purchase of raw sugar at US$0.175 per pound via long term contract (LTC) from 2009-2011, the Dewan Rakyat was told today.

Deputy International Trade and Industry Ministry Mukhriz Mahathir said the government decision to sign LTC 2012-2014 at US$0.26 per pound was appropriate as it was difficult to predict the sugar price.

azlan “The cost of raw sugar production in producing countries has risen to 22-23 US cents per pound compared to 17-18 US cents per pound previously and the  cost is expected to rise.

“The RM2bil savings were due to the low price of raw sugar at the start of LTC 2009-2011 compared to the final stage,” he told Tony Pua (DAP-Petaling Jaya Utara).

Pua wanted to know why the government purchased raw sugar at US$0.26 per pound although the world market price did not exceed US$0.24 per pound.

NONE The average futures market price of sugar for 2012-2014 when LTC was signed stood at US$0.24 per pound excluding transportation cost at US$0.02-0.03.

Mukhriz ( left ) said the purchase should be viewed from the aspect of refined sugar security that was not affected from 2012-2014.

To a supplementary question from Pua on the expected drop in the price of raw sugar, he said the ministry would monitor the situation.

“LTC is not used to meet 100 percent needs of manufacturers who can purchase from the open market if the price is lower than LTC or purchase directly from the international market.”

Mukhriz said 13 large food and beverage companies are no longer eligible for supply of refined sugar from local producers at subsidised prices from January 2011.

The decision was made after the companies’ average monthly consumption of sugar was found to be very high.

“They are allowed to buy directly from international suppliers of refined sugar if the price is lower than the pre-subsidised price,” he said in reply to a supplementary question from Ibrahim Ali (Independent-Pasir Mas).

- Bernama