By Staff Reporter
ISLAMABAD: The government has ordered officials to be stationed at all sugar mills to monitor stock levels and enforce a price cap agreement, as retail sugar prices climb to around Rs200 per kilogramme amid reports of non-compliance and supply disruptions.
The directive came on Monday during a meeting chaired by Minister for National Food Security and Research Rana Tanveer Hussain, who expressed concern over some sugar mills failing to adhere to an agreement signed on July 14 with the Pakistan Sugar Mills Association (PSMA).
The agreement fixed the ex-mill sugar price at Rs165 per kilogramme from July 15 to August 15, with a permissible monthly increase of Rs2 per kilogramme until October 1, 2025, setting prices at Rs167 on August 15, Rs169 on September 15, and Rs171 on October 15.
Officials reported that several mills were not releasing stocks on time, disrupting market supply. To address this, Hussain ordered officials to be stationed at all sugar mills to monitor stock levels and ensure compliance. “The government is committed to maintaining price stability and ensuring availability of sugar in the market. Any violation of the agreement will not be tolerated,” the minister said.
During the meeting, PSMA Chairman Chaudhry Zaka Ashraf highlighted operational challenges faced by millers and urged that compliant mills not face punitive action. Hussain responded by assuring prompt attention to genuine grievances and announced the formation of a Grievance Redressal Committee.
The country is facing sugar crisis after the price of sweetner climbed to Rs200 per kilogram from Rs140 at the start of the year, a 36% jump. The price surge stems from a 14% drop in domestic production, which fell to 5.9 million metric tons this year due to adverse weather and lower cane yields.
Adding to the strain, Pakistan’s sugar exports skyrocketed 2,200% in the last fiscal year, with 765,734 metric tons shipped between July and May, generating Rs114 billion in revenue, per industry data. While the export windfall bolstered Pakistan’s fragile foreign exchange reserves, it decimated local stocks.
The Pakistan Sugar Mills Association (PSMA) estimates current inventories of 2.8 million metric tons will last only until November, given monthly consumption of 535,000 metric tons against an annual demand of 6.4 million tons.
The government, which previously justified its export policy by pointing to ample domestic supplies, now faces a supply crunch that has sparked public outcry. Critics argue the export approvals prioritized sugar millers’ profits over consumer affordability, leaving households to bear the brunt of soaring costs.
The government is now seeking breakbulk shipments of 50,000 tons for delivery between August 21 and September 5, or September 1 to 15, with another 50,000 tons in ocean shipping containers to arrive between August 21 and September 10 o bridge the gap. An international tender said all supplies must reach Pakistan by September 30, with containerized shipments allowed a five-day grace period.
Meanwhile, a parliamentary panel led by Member National Assembly Atif Khan is poised to propose a tax on sugar millers’ windfall profits, mirroring a levy imposed on banks, following a sharp rise in sugar prices.
The multi-party panel, comprising Atif Khan as convener, Mirza Ikhtiar Baig, Shahida Rehmani, Tahira Aurangzeb, and special invitee Farhan Chishti, was formed by the National Assembly Standing Committee on Commerce to investigate the price spike, sugar exports and imports, and industry patterns over the years. The commerce committee, chaired by Jawed Hanif Khan, recently labelled the sugar industry a “mafia” and vowed to uncover its “hidden” beneficiaries. An official from the Ministry of National Food Security said, “Taxing windfall profits will support the national exchequer and send a strong message to the industry not to exploit the public.”
Officials say millers, enticed by international prices 30-40 rupees per kilogramme higher and no sales tax on exports, prioritised exports over domestic supply, driving local prices up. The government has hesitated to permit exports, fearing further price escalation. The agreement stipulates that exports will only be allowed if sugar stocks—including carryover and 2025-26 production—exceed 7 million metric tons, with a final decision to come 30 days after the 2025-26 crushing season ends.
A four-member committee, including federal and provincial representatives and two PSMA members, will assess stocks using the Federal Board of Revenue’s Track & Trace System data. Insiders from the Ministry of National Food Security argue that the agreed 2-rupee monthly price increase—based on a 25% interest rate, is outdated, with rates now at 11%, suggesting a carrying cost closer to 1 rupee per kilogramme. They accuse the PSMA of exaggerating costs.
The industry has long been accused of manipulating data and profiting from export-driven shortages, a pattern seen under previous governments where larger mills with greater holding capacity reaped the benefits. To enforce the agreement, provincial governments are tasked with regulating retail prices, while corporate consumers must procure sugar directly from mills at mutually agreed rates.
Copyright © 2021 Independent Pakistan | All rights reserved
