Is market operation effective?

Is market operation effective?

Sugar has suddenly become a rare commodity. The product has reportedly vanished in Surabaya and Malang (both in East Java) since last week. Some people, however, question the scarcity of the commodity, considering that sugar has been imported to the country.

An official at the Ministry of Industry and Trade suspects that some distributors are hoarding the sugar, hoping its price would soar before they distribute it to the market, so that they may reap greater profits.

The ministry is responsible for these delinquent distributors, and has assigned the State Logistics Agency (Bulog) to manage the sugar business, according to a ministerial decree.

When the price of sugar drops, Bulog will buy the commodity in a bid to increase its price; and when the price soars, the agency will release stock onto the market to reduce the price. This is called "market operation".

However, the effectiveness of a market operation is questionable, as the scarcity of sugar on the market shows that the mechanism has failed. -- Bisnis Indonesia, Jakarta