Despite the government's waiver of sales tax and excise duty on the import of 0.75m tons white sugar, the upward trend in sugar prices continued on Thursday as prices rose to Rs 67 kg from Rs 64 kg, its price in the wholesale market on Monday.
Sugar dealers in akbari mandi told Business Recorder that the mills are quoting ex-mill sugar price at Rs 6625 to 6650 on account of short supply and sharp rise in the price of sugarcane that has hampered the industry to go into full production.
Prices rose to Rs 6700 from Rs 6500 per 100 kilograms a day before. Sugar was traded at Rs 6400 per 100 kg three days ago (Monday).
Meanwhile the shopkeepers and commodity stores are selling the sweetener at Rs 68 to 69 per kilogram, however some elements are engaged in hoarding in anticipation that the prices may go up to Rs 80 in the summer. One shopkeeper from Mozang said that he had purchased sugar from the wholesale market at Rs 67 per kilogram, so after adding the transportation and other overheads he would sell it at Rs 68 per kilograms.
Talking to Business Recorder Pakistan Sugar Mills Association (PSMA) Punjab Chairman Javed Kiani said the sugar industry is not involved in price hike, in fact it is due to the high prices of sugarcane. "We were purchasing sugarcane at a rate of over Rs 200 as against the government's fixed price of Rs 100 per 40 kg."
According to their calculations, one kilogram of sugar costs them Rs 70 without adding the overheads. He said that he does not want to speculate about the future sugar prices but it is a fact that sugar production is costing the mills Rs 80 per kilograms this year. He denied that some mills had been closed due to non-availability of sugarcane and said that all 44 mills in Punjab were operational.
However, he admitted that after Moharram the sugar crushing momentum had slowed down. A prominent sugarcane grower of Sargodha confirmed that the mills are outreaching the farmers to buy the raw material and paying them at their door-steps at the rate of Rs 170 per 40 kg to run their mills.
Kiani suggested that the government should adopt a clear cut import policy to overcome the sugar crisis and end the speculation. He said the government should have buffer stocks and the import should be on a faster pace. Agronomists say the small growers are using sugarcane to prepare "Gur" that fetches them more money as compared to sale of the commodity to the mills. " Gur is being at Rs 80 to Rs 90 per kg without any GST or taxes as it is being smuggled to Afghanistan and Central Asian Countries for fermentation of wine, vodka, and other liquors," they added.
They say that depleted crops, international prices at 30-year highs and hoarding are the causes for Pakistan's latest commodity price hike. According to the Pakistan Sugar Mills Association, Pakistan is Asia's third-largest user of sugar and the world's fifth largest producer of sugarcane. Estimates show a 23 percent decline in sugar crop production to produce 3.2 million tons this year. That means a severe shortfall as annual national consumption is 4.2 million tons", they added.
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