Bitter woes for sugar importers

By Charumini de Silva

Sugar importers and traders were wary of the Government’s move to slap a fresh levy of Rs. 6 per kilogramme on imports, saying that the hike could not be passed on to consumers while insisting that they would present their grievances to the Cabinet Subcommittee on the Cost of Living this week.

Following the Finance Ministry’s directive to increase the import duty, the Sri Lanka Sugar Importers Association (SLSIA) met with Industry and Commerce Minister Rishad Bathiudeen and the Consumer Affairs Authority (CAA) Director General last week seeking assistance as well as to make it clear that the ruling of a controlling price for sugar imports was unreasonable.

“The Minister called for an immediate meeting with CAA officials, other line ministry officials and recommended for us to take up the matter with the Cabinet Subcommittee on the Cost of Living during this week,” an SLSIA spokesman told the Daily FT.

The SLSIA believes the Government would have increased the tax due to the reduced sugar prices in the world market. 

“We agree that the world market dropped to $ 550 for the cargo that is arriving after January next year. However, with the increased levy of Rs. 13 the landing cost of those will be Rs. 100 a kilogramme,” he explained.

According to the SLSIA, the importers have cleared cargo purchased between $ 600 MTs and $ 625 MTs in the recent past, where cargo itself cost them around Rs. 102 per kilogramme with a levy of Rs. 7 per kilogramme. 

Stressing that the Government had increased the import levy three times during this year, he said that the Pettah wholesale market sold sugar at Rs. 93 at present but insisted that they could not maintain the price structure for too long as the traders would eventually increase it to around Rs. 100-Rs.105.

“The authorities must understand that the retailers in the outskirts cannot sell sugar at Rs. 95 considering the cost of transportation and various other costs,” he said. 

SLSIA reiterated that there had to be a minimum margin of 10% from the wholesaler to retailer as there were transport and other costs and having a MRP on a commodity such as sugar, which has a volatile world market, is not practical at all.

Noting that the rupee has depreciated 3% against the dollar within a month from Rs. 146 to Rs.151, he asserted that sugar importers were facing great difficulties in the marketplace and the tax hike would have an additional impact on their margins if the exchange rate continued to depreciate at this pace.

Despite the proposals lobbied for by the stakeholders requesting the Government to remove the MRP since October last year, there has been no response to these moves.