The ministry of industries on Friday expressed concern over the rising sugar price, maintaining that the increase is not justified. Information collected by the government agencies leads to the conclusion that hoarders are raising prices ahead of Ramazan. Pakistan Sugar Mills Association (PSMA) had proposed to the government to procure 0.4 million tons of sugar from the mills and keep it as strategic reserve, but the policymakers failed to take this decision in time.
Now, TCP intends to procure 50,000 tons sugar from mills at Rs 60 per kg which, analysts believe, is a grave violation of CCP rules. However, the ministry of industries on Friday issued a press release, claiming that sugar supply (4.7 million tons) is surpassing the demand (4.3 million tons) in 2010-11 season.
Break-up is as follows: domestic sugar production 4,168,723 tons, leftover stocks 19,575 tons, stocks with TCP 400,000 tons, sugar imported by private sector 138,000 tons, and total 4,726,298 tons. Presently sugar stocks stand at 2.012 million tons, which are sufficient till 25th December 2011 based on the consumption pattern of 350,000 tons per month.
In 2010, the monthly offtake of sugar was particularly low. The total offtake in 2009-10 was 3,786,556 tons or in one month 315, 546 tons of sugar was consumed. Average sugar consumption/offtake is estimated at 350,000 tons per month or 4,300,000 tons. Consumption is calculated on the basis of last 12 months average offtake. It shows that sugar demand is 'price resilient'. If the price is high less sugar is consumed.
As regards sugar price being raised on the plea of 'Federal Excise Duty' the factual position is that white sugar was allowed two concessions till March 2011. Firstly, the assessed sugar price per kg was fixed at Rs 28.88/kg. Secondly, sales tax levied was 8 percent of this fixed assessable value. In March 2011 the assessable value was taken as the 'market value' while the sales tax was still levied at 8 percent or approximately half the sales tax levied on other items. Now, sugar has now been exempted from sales tax through Financial Act 2011 and only 8 percent FED has been imposed, the press release added. Moreover, 2.5 percent SED has also been abolished as for all other items.
The ministry of industries is of the view that as such if ex-mill price is taken as Rs 60/kg then the 8 percent FED will be Rs 4.80/kg. The increase in sugar price is totally unjustified as the sugar mills have already increased the ex-mill price to the tune of Rs 6.30/kg (sales tax 8 percent and CED @ 2.5 percent) since March 2011.
"Sufficient stocks of sugar are available in the country and there is no shortage of sugar. The interior ministry and concerned provincial departments, have already been requested to control any smuggling or hoarding in their jurisdictions. The sugar sale is continuing at Rs 55/kg from USC outlets for lower income groups," the press release concluded.
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