Tuesday, February 7, 2012

Malaysian Government Buys High-Priced Sugar

It's obvious why they bought sugar way above the market price. There is a cut there for those umno crutch holders.

Our government, in its finite wisdom, negotiated a long-term sugar supply deal for a fixed price of US$26 (RM78) instead of its current price on the global market of US$23 per hundred pounds. Please note, this is US$3 above the world current market price.

And the minister’s reasoning for this is that “if the price fluctuates, and it goes up, we will profit.” Well I’m a cynical, pessimistic, IT graduate-cum-writer so I’ll ask this: what if it goes down?

According to a graph which I Googled and then configured myself to show the price fluctuations of sugar in January 2012, the price of sugar on average that month was US$23.59 per hundred pounds. Now, I happen to know that most contracts are done with the price either on that business day, or a monthly high price is selected as the basis.

The high price for January was only US$23.78.

Now perhaps I’m wrong. Perhaps, since this decision was made in January, our brilliant minister took the average sugar price of last year as a basis for his brilliant economic decision. So I’ll check.
For the year 2011, sugar was averaging at most US$23.40.

So just why are we paying an average of US$2.60 to US$2.22 extra per pound of sugar?
I especially loved this quote:

“Two out of the three biggest sugar producers in the world have been affected by floods,” he said, referring to neighbouring Thailand and Australia, and added, “The price of sugar has not dropped. Even if it has, it is negligible.”

By November 2011, this was quoted from Bloomberg:
White, or refined, sugar for December delivery rose 0.2 per cent to $655 a ton by 9.43am on NYSE Liffe in London. Raw sugar for March delivery climbed 0.3 per cent to 25.65 cents a pound on ICE Futures US in New York.

So even with the Thai flood, the Australian cyclone, the price of sugar never went up above US$26. Now perhaps this minister thought he could use another nation’s natural disasters as a scapegoat, but I do hope that in the future he realises that with Rais Yatim’s goal of making Malaysia 50 per cent broadband accessible, bullshit excuses like this will not be tolerated.

Like I said, Najib’s not the only problem. He has ministers who are not making a lick of sense in reasoning why they’re paying more than required for commodities like sugar.

Like I said, Najib isn’t the only problem. But he is, in a large part, responsible for all of it.

He should have banned Perkasa for being a racist NGO a long time ago.

He should have told his minister to gauge the sugar market properly and make ready a good public relations excuse that was Google proof to be proven untrue.

And most of all, he should have made sure that all this faeces did not hit the fan in an election year!

- Hafidz Baharom