PAKISTAN: Sugar prices jump 10% in Lahore
Published: 08/11/2017, 10:04:57 AM
In spite of huge stock in the country, the rates of sugar in wholesale market have increased by around PKR500 (US$4.74) per 50kg to PKR5,500 during the last one week due to limited sugar supply from the mills, according to Pakistan's Nation newspaper.
As a result, the prices in retail market have jumped by PKR5 to PKR60 per kg from earlier rate of PKR55 per kg. Presently, no shopkeeper is following the official rate of sugar to sell the commodity at PKR55 per kg with some of the retailers refusing to sell white sweetener.
Sugar Dealers Association President Asghar Butt said that the rates have surged because the mills had put an unannounced ban on supply in protest against the government for not allowing export of sugar. He said that the dealers could not lift sugar from the mills despite an upward surge in its prices.
According to market sources, sugar mills and the government are at loggerheads after Finance Minister Ishaq Dar called for a probe into the recent price hike in the retail market. Dar directed the federal secretaries to take up the matter with provincial governments on increase of sugar prices. He said stable sugar prices must be ensured for the benefit of general consumers in line with standing instructions from the Economic Coordination Committee of the cabinet.
Reacting to Dar statement, the Pakistan Sugar Mills Association (PSMA) blamed the government for creating a glut-like situation in the domestic market by not allowing exports at the right time. The entire stock of the sugar industry is pledged with banks. Due to a glut-like situation, it is impossible to de-pledge the stocks and deliver to customers at the current level of prices," a spokesman for the PSMA said. "The minister should also ask for the cost of production of sugar mills before making any negative statement," he added. He said sugar prices touched the lowest ebb because of oversupply and a lack of permission for the export of sugar. Resultantly, the price declined to PKR45-46 per kilogram, which can never be considered a benchmark. The price of sugarcane is fixed by provincial governments while the sugar price is determined by market forces. According to experts, in 2016, the sugar prices reached up to PKR70 in Ramazan but in the last holy month the prices remained stable at around PKR56, which is benefiting the consumers throughout the country and has helped in controlling inflation.
The sugar price in the domestic market according to the Sensitive Price Index for June, 2017 was PKR55 per kg which was 12% lower than the level of December, 2016 when the export of sugar was allowed by the ECC. They said that in view of abundant surplus sugar stocks available in the country as reported by Sugar Advisory Board of Ministry of Industries, the committee decided to recommend to the ECC an export of 600,000 tonnes of sugar, in addition to the 425,000 tonnes already allowed for export, as price was stable in the domestic market.
According to the PSMA, the federal government had fixed the assessable price of sugar at PKR60 per kg, which means the selling price should be PKR66 to recover sales tax. The federal government failed to support sugar exports while the country was in dire need of foreign exchange. Although a surplus quantity was available, the government allowed exports of only 425,000 tonnes.
The spokesman said the industry could have easily disposed of the surplus quantity without seeking any rebate. Although the Sugar Advisory Board recommended that the export of 1.2 million tonnes of sugar be allowed, the ECC permitted foreign sales of only 300,000 tonnes without any rebate. Now that the international market price is US$380 per tonne, it is important to dispose of surplus sugar with a rebate from the government keeping in view the fixed sugarcane price, he added.
The sugar millers claimed that they have started dispatching sugar from their warehouses after an unannounced ban of almost one week following the directives issued by Finance Minister Ishaq Dar to the secretaries of the industries and commerce departments to take corrective measures.