Pakistan government forms committee to tackle soaring sugar prices

Islamabad: Prime Minister Shehbaz Sharif has set up a committee, led by Deputy Prime Minister Ishaq Dar, to negotiate lower sugar prices with the sugar mills. The decision comes after the government approved sugar exports, which led to a significant surge in exports and domestic prices, reports The Express Tribune.

According to the Pakistan Bureau of Statistics (PBS), the price of sugar per kilogram has risen to an average of Rs172 as of last Friday, marking a Rs27 increase compared to the same period last year. The Food Security Ministry estimates that each rupee increase per kilogram costs consumers an additional Rs2.8 billion.

To address the issue, the Prime Minister’s Office has announced a 10-member committee tasked with engaging the Pakistan Sugar Mills Association (PSMA) to bring down prices. The committee is expected to submit its report within three days. In its first meeting on Monday, government officials informed sugar millers that the average production cost was Rs153 per kilogram and urged them to lower prices accordingly. However, industry representatives requested time to consult stakeholders before committing to a new price structure.

The committee was formed following an alarming price hike, with national data showing a Rs10 increase within a week and a Rs27 rise compared to last year. The highest recorded price reached Rs180 per kilogram in Karachi and Islamabad. Notably, the current price is Rs27 higher than the Rs145 threshold set when the government initially allowed the export of 600,000 metric tons of sugar.

A Food Ministry official told The Express Tribune that the Rs1 per kilogram increase resulted in an additional Rs2.8 billion windfall for sugar millers. Over the past week alone, millers reportedly gained Rs26 billion, and since the start of the crushing season, their total additional earnings have reached Rs76 billion.

One of the main drivers behind the price surge is the government’s decision to permit sugar exports. PBS data released on Monday showed that from July to February of this fiscal year, the country exported 757,779 metric tons of sugar—a staggering 2,190% increase from last year’s 33,101 metric tons. In monetary terms, sugar exports generated $407 million, an increase of $386 million, or 1,831%, compared to the previous fiscal year.

According to the Prime Minister’s Office, the committee will negotiate with the PSMA to lower ex-mill sugar prices and stabilize market rates, especially in light of the sharp rise observed during Ramadan. The committee includes Food Security Minister Rana Tanveer Hussain, Law Minister Azam Nazeer Tarar, Adviser to the Prime Minister Dr. Tauqir Shah, Special Assistant Tariq Bajwa, and four PSMA representatives. The industries secretary is providing secretariat support. However, Special Assistant to the Prime Minister on Industries, Haroon Akhtar Khan, has not been included in the committee.

Shehbaz Sharif has directed the committee to finalize its deliberations and present a compliance report within three days, ensuring that the price surge issue is effectively addressed.

Iskandar Khan, President of the Khyber-Pakhtunkhwa chapter of PSMA, attributed the price hike to rising sugarcane costs. He stated that the average sugarcane price was Rs455 per 40 kilograms, pushing production costs to Rs174 per kilogram. He further claimed that refining imported raw sugar would result in a final cost of Rs190 per kilogram.

The Economic Coordination Committee (ECC) initially approved the export of 100,000 metric tons of sugar on September 20, which was later increased to 600,000 metric tons in October. The Express Tribune had previously reported that this approval was based on exaggerated stock and consumption estimates.

Despite the soaring prices, the PSMA denies that exports were the main cause. A PSMA spokesperson from Punjab stated that the industry had agreed to cap ex-mill sugar prices at Rs140 per kilogram during the export period—below production costs. He added that due to surplus stock, ex-mill prices remained between Rs120 and Rs125 per kilogram for months, resulting in substantial industry losses.

The PSMA spokesperson argued that the market price was influenced by hoarders and profiteers who manipulated supply dynamics for undue gains. He dismissed the need for white sugar imports, asserting that domestic stocks were sufficient to meet demand until the next crushing season. However, he acknowledged that the PSMA had proposed a structured policy for raw sugar imports and had submitted recommendations to a ministerial committee for consideration.

 

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