With sugar prices already sky-high, rumours of a plan to import expensive sugar from abroad could be the work of unscrupulous elements manipulating the market to further hike prices.
By Muhammad Ali
ISLAMABAD: All the four provinces of Pakistan have adequate sugar stocks to meet domestic needs through the start of the next crushing season, a top federal official said Saturday, asserting the government has no plans to import sugar from abroad.
According to Capt. (R) Muhammad Mahmood, Secretary Ministry of National Food Security & Research (MNFSR), the confirmation of adequate sugar stocks came at Saturday’s meeting of the National Price Monitoring Committee (NPMC), attended by top officials from the provinces.
Accordingly, Mahmood made clear that the government has no plan to import sugar, adding that a letter of the Trading Corporation of Pakistan (TCP) was being misquoted in this regard.
Sugar prices have steadily increased in the domestic market for the last several years without any discernible economic reasons. This year alone, the price of the poor man’s staple food has soared from PKR 100/kg to PKR 180-185/kg since April.
Observers say the trend is fuelled by market manipulation to fatten the profit margin of the politically well connected sugar barons. It is estimated that every rupee added to the retail price of a kilogram of sugar enhances the sugar sector’s coffers by PKR 6 billion.
Notably, every political party’s leaders and their close associates own a sugar plant. This likely explains why the sugar barons always have their way with the government, irrespective of who is in the hot seat.
The government of former Prime Minister Shahbaz Sharif authorised export of 250,000 MT of sugar on January 1, 2023 – after the Pakistan Sugar Mills Association (PSMA) assured the government that at the start of the new crushing season in November 2023, the country would be left with a sugar surplus equivalent to two months of domestic consumption.
The argument was based on the claim that the industry had produced a record 8 MMT of sugar in the 2022 crushing season. It was further argued that a bumper sugarcane harvest was expected in 2023, which would further add to the surplus.
According to official figures, the sugarcane crop in fiscal year 2022-23 stood at 91.111 MT against 88.651 MT in 2021-22, registering a growth of 2.8 percent. However, the price of sugar started increasing in April, 2023, despite the fact that the country had a carryover stock of sugar at 0.99 MMT from the previous year (2021-22).
This steady increase in price of the essential commodity led the MNFSR to set in motion a mechanism to fix the price of sugar under the law. The Sugar Advisory Board (SAB) in its 6th meeting held on April 17, 2023 approved fixation of price of sugar at PKR 98.82/kg after due consultation with all stakeholders .
Consequently, MNFSR fixed the price of white crystalline sugar at PKR 98.82/kg dated as of April 20, 2023 under the provisions of Sections 3 and 4 of the “Price Control and Prevention of Profiteering and Hoarding Act – 1977.
The move, however, was challenged in the Lahore High Court, which suspended the Ministry’s order. The status quo has since been maintained in pursuance of the court order while sugar price has soared to PKR 180-185/kg.
The steady increase registered by the price of sugar causes particular stress among the low-income consumers and adds to food inflation. Some experts say the prices of sugar in the domestic market are surging as sugar barons along with stockists were allegedly manipulating the market to fatten their profits.
Sindh has increased the Indicative price of sugarcane at PKR 425/40 kg, enhancing the price by 41 percent over the last year. This will further induce pressure on the price of sugar, as the industry and the stockists will hoard the commodity for profiteering.
Sugar sector insiders argue that their hands are tied because the government regulated the prices of sugarcane so the input price of their contributor was fixed. They argue that the cost of borrowing and other costs including transportation have gone up manifold so the prices of sugar should be determined on the basis of higher input costs.
However, officials involved in the decisionmaking of the sugar sector insist that in view of the assessment of stock positions, they are certain that there is no need to import sugar at all.
They say the TCP has written a letter to the Pakistan Embassy in Brazil as a routine check on the availability and prices of sugar in case of a contingency. Some unscrupulous elements are using that letter in a propaganda effort to substantiate that the country is about to buy sugar from Brazil.
The Ministry of National Food Security & Research has already requested the provincial governments for price fixation and its enforcement, as per law and strict action against hoarders and price manipulators, who are creating panic in the market for their own vested interests.
Sugar hoarders should immediately release the stocks as per the demand of the market to stabilise the commodity price.
The government has also initiated action against all the elements involved in smuggling of the commodity. In this regard, the Ministry of Interior has already initiated action.
The government is closely monitoring the sugar stocks, consumption, availability and market price in the best public interest.
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