Consumers paying for sugar millers’ protection

Consumers paying for sugar millers protection - price of sugar


KARACHI: Pakistani consumers are paying more for sugar than its price in the world market.

The sugar price in world market declined by 16 per cent in July-April 2016-17, in Pakistan the production of sugar increased but it did not translate into price relief for the consumers.

In July 2016, the international price of sugar was $430 per tonne (Rs45 per kg), which dropped to $360 per tonne (Rs37 per kg) in April 2017. In May the price stood at $410 per tonne (Rs43 per kg).

Local sugar prices remained volatile. Currently, the wholesale sugar price is Rs53 per kg while retailers are charging Rs58 to Rs60 per kg at different locations.

When sugarcane crushing started in Nov 2016, the wholesale price was Rs57 per kg. It rose to Rs62 per kg in Jan 2017 after the government allowed export of 225,000 tonnes of the commodity. Retailers pushed up the price to Rs64 to Rs65 per kg.

The government allowed sugar exports after ascertaining buffer stocks of 1.23 million tonnes in view of 400,000 tonnes of monthly sugar consumption.

In February the wholesale price fell to Rs58 from Rs60 per kg while in March 2017 it hovered between Rs55-Rs57 per kg.

“It is hard to import sugar as there is 20pc customs duty and 40pc regulatory duty,” a trader said, adding the prohibitively high duties are meant to shield the interests of sugar mills, mostly owned by the political hierarchy, often at the cost of consumers.

Karachi Wholesalers Grocers Association Chairman Anis Majeed favoured export subsidy to clear surplus stocks and help commodity to compete in global market.

He said sugar price of Rs55 to Rs65 per kg is affordable. If prices fall too low sugarcane growers would switch to some other crops. The support price of sugarcane is Rs180 to Rs182 per maund.

Millers launched a media campaign in March seeking permission for exporting sugar. The government caved in and after a gap of seven months exports resumed from Feb fetching $8.7m foreign exchange. In December 2016, the Economic Coordination Committee (ECC) allowed export of 225,000 tonnes of sugar till March 31 under the condition that the Commerce Ministry would recommend to the ECC to stop sugar exports if domestic price scaled up.

In March, the ECC further approved export of 200,000 tonnes sugar (without any subsidy). The export of sugar was allowed within 60 days after approval of export quota by the State Bank of Pakistan or by May 31. The government, at that time, allowed only those mills to export sugar that had cleared outstanding dues of farmers and had crushed sugarcane at optimum capacity. In the current month, the ECC had further extended the deadline for sugar export to July 31 from May 31.

According to the Economic Survey 2016-17 the production of sugarcane portrayed a very promising picture and reached the historical high of 73.6m tonnes from 65.5m tonnes in 2015-16. Its production accounted for 3.4pc in agriculture’s value addition and 0.7pc in overall GDP.

The production increased due to an increase in area under sugarcane cultivation as farmers switched from cotton after crop failure in 2015.