Pour Less Sugar On Me...

I return to one of my earlier series that explores the relationship of subsidies with marginal economics of essential products and its consumption in Malaysia, the 'cooking oil' series. However, as there is a variation in the product focussed on, being sugar, I've chosen to alude to a completely different set of artists to Shakespeare for the title of this piece... and I only chose Def Leppard as it seems to fit one of their hits... no hidden agenda... and of course, I like their music!

Yesterday, one of my favourite NGOs, the Consumer Association of Penang (CAP), made the news again when they chose to go to press on the issue of Malaysians being among the highest, if not the highest, consumers of sugar in the world; 26 teaspoons of sugar a day! The CAP then urged the authorities to address this through education and legislation, whilst showcasing the direct and indirect medical implications of such high sugar consumption by Malaysians, such as:

1. Malaysia having the fourth highest number of diabetics in Asia which was expected to increase by more than 60% to 1.3 million in 2010.


2. ~72% of 16 million Malaysian adults are sick with a non-communicable disease like diabetes, hypertension or cancer.


3. Malaysia having the most overweight and obese people in Asia; ~54% of the adult population!

I wish to add a tangent to the lobby against sugar related more to economics though. Why is sugar consumption in Malaysia so high? I believe it is partly to do with the price of sugar, seeing as it is a controlled item, which is hence subsidised by the government! The proliferation of sugar hence is not just due to Malaysians having sweet teeth, but because as a bearer of taste, sugar is a cheap option to fulfill the demands of our discerning food-obsessed nation!

Subsidies on sugar presents a dis-economy in many ways, for not only does it boost the consumption of sugar based on an artificial demand-price trade-off, but as sugar or its raw materials are IMPORTED, there is no real benefit of its low prices to the greater economy! Sugar, unlike rice, is a luxury that is so non-essential that any increase in price leading to a consumption drop may not even result in a balancing consumption of other goods... people just consume less!

So, besides creating tycoons from these subsidised businesses, the only 'gain' to the Rakyat from low sugar prices, hence appears to be a frequently pursued transitional feel-good effect related to enjoying sweet stuff cheaply, probably as often as we can afford to! And the result healthwise...

I had expressed in an earlier posting of the need to abolish altogether the subsidies on sugar and the economics were directly related to health, as:

1. The relationship between high sugar intake and poor Malaysian health presents a link between sugar subsidies with poor worker productivity from absence or ineffective work due to illness. The direct economic impact of sugar subsidies on said reduction on national productivity would require a university thesis to quantify, but the link should be clear to us even now.


2. The direct impact of poor health of the populace would be an increased burden, and cost, on our healthcare system and infrastructure. Effectively, the cost is related not just to higher dispensation of drugs (hypertension pills, insulin, etc) and medical services, but also generally a higher cost to insure the health and death of Malaysian citizens as a whole even by public agencies and corporations.


3. The caring for the ill is still a very personal activity in Malaysia. As the number of those in need increase, the burden upon the healthy productive members of society will result in secondary inefficiencies that will further penalise the economy. Confusing? Well, imagine a working mum having to take time off to attend counselling of an obese child. Imagine the dad then being hospitalised for hypertension. Will the working mum remain working?


4. A generally less healthy populace results in the older generation being more ill and less productive at earlier age. For example, politicians are still considered young and sprightly in Japan at the age of 60, but in Malaysia, even at 55 some are labeled old! OK, politicians are perhaps not the best examples of productivity, but no one can deny the national shame at losing Yasmin Ahmad to stroke at the young age of 51!

The straight-line negative economic impact of sugar subsidies can hence be represented in the following chain (I'll chart it up nicely some other time):

Sugar Subsidies -> Higher Sugar Consumption (-ve economic impact from higher sugar imports) -> Poorer Health of Populace (-ve economic impact from poor productivity) -> Higher Healthcare Costs (-ve economic impact from avoidable increased cost of Health) -> Higher Insurance Costs (-ve economic impact from cost of Health cover) -> More Time Spent Caring for Ill (-ve impact from removal of productive workers to act as carers of the ill) -> Older Members Of Populace Relatively Less Productive (-ve impact on economic potential of population above 50 years of age)

So, whilst in theory potentially unpopular, the government should remove the sugar subsidies above all else. It makes sense in terms of ensuring better long-term health of the populace by effectively increasing the cost of getting ill from high sugar consumption. Hopefully I have also made a convincing argument as to the economic merit of removing the subsidy, not just because sugar is imported, but due to the real cost to our economy of the poor health it engenders.