Less Sugar, More Money

 [The article is a respond to the article "Awang Adek: Subsidy reduction for sugar can

curb sugar smuggling" on The Star Online dated October 7th 2012. Full article can be 

found here. ]

Imagine our daily life without sugar; waking up to bitter coffee, tasteless bread and pastries. Isn’t that look like a bad start for the day? Every single continent regardless the countryside or central business district, every single person on the planet needs sugar. It keeps you going as it helps you with your sugar level in your body and without it, we will be less productive at our workplace. Have you ever heard of sugar rush? Yes turning into hyperactive that usually happens to kids. Hypothetically speaking, without sugar its pretty much drive the level of production of workers in any respective areas all over the world to extremely low rates and simultaneously affect the gross domestic product rates.  Even animals need sugar. If I have to name a few animals that need sugar it would be sugar glider and elephant. All right now lets move to the fact, sugar is the most heavily subsidized more than any other basic commodity in the world. 80 percent of the world’s government subsidizes it. Apparently our government now reduces the subsidy for sugar in Malaysia that fall under the category of normal goods. They believe that by reducing the subsidy will help in reducing the smuggling activity across the border between Kelantan and our neighboring country, Thailand. Now, we’re talking about the possibility of what might happened if government decided to stop subsidize normal goods such as sugar and in my opinion It could go both ways.

Smuggling may be the subject of sudden attention on sugar since in reality it is inelastic which means it is as nearly as impossible for us especially Malaysians to go throughout the day without having it. Imagine what would happen to Starbucks, Chatime, or any food outlet? And we can’t drink milk tea without sugar hence the idea of reducing the subsidy will never change the fact that it may cause problems since people  still need to have sugar as it is part of their necessities or normal goods. The only available substitute for sugar that is available on the shelf in the supermarket probably chemically engineered sweetener or honey. As for honey in some country consider being a luxury items like New Zealand (Known for its Manuka honey that can provide natural antibiotic) range between $30 to $45 New Zealand Dollar a bottle and that my friend, is not cheap at all.

                   In my opinion, I personally think that by cutting subsidy by 20 cent will not necessarily prevent smugglers from smuggling sugars from other country with lower prices. Worst-case scenario it may become the cause for more underground activity where the whole idea was the other way around. Even if the government can deter the problem, some supplier may eventually illegally hoarding sugar.

As the Law of demand stated that if a price of a good increase the quantity demanded will decrease, since the price of the sugar getting more expensive and the quantity demanded for sugar is decreasing in a way telling us “hey, look at the bright side we can live a healthier lifestyle from now on !”. Pressure can be a powerful motivation to curb our appetite unless someone going to start making their own sugar factory in their backyard. Perfect timing for the consumer to start slow down on their sugar consumptions since 3.4 million, which is equivalent to 14.9 percent out of 28,859,154 that recorded in 2011 are diabetic. It will benefit not only for their pocket but also their health. Imagine if the consumptions of sugar cut down, public and private health services provider and diabetic food supplier may have to diversify their businesses.

Shortage on supplies for sugar happens in Malaysia usually during festive seasons, and I believe that the supplier will put higher prices in order to balance out the demand for sugar and put pressure on the consumer to buy instead of going back home empty handed due to the scarcity.  So this is where the government must intervene by controlling the price of sugar so that every consumer if not all, most of them can afford to buy the goods. Not too low so the supplier can make money and not too high that consumer cant afford it for it will meet at the point of equilibrium. Another way of tackling this issue is by importing sugar from other country. Shortage of supplies will also affect country that importing sugar from Malaysia such as Singapore which importing 20 percent of the sweet thing.

   When the price of basic commodity fluctuating, companies involved in Food industry may take a beating and ineffective price management may risk the company’s success. For that reason necessary action need to be implement in the short run in order to maintain the survival of the company in the long run. Factories manufacturing all sorts of food product may have to cut down on expenses of production by cutting the salaries of the workers including higher rank of command in order to cope with the fluctuating price of the basic commodity. They also need to find substitute good in order to meet with the demand although it may put a hole in the safe since we need money to make money right? .

In order to achieve the success rate, every organization and responsible authority need to take action in handling this issue and not only by reducing subsidy because it will be a useless effort if only government take part in exterminate the illegal smuggling. What is the point of vacuuming a room during the storm with open windows? .