Government fails to check rise in sugar prices

The government has failed to check sugar prices, as its ex-factory rates surged by Rs 150 per 100 kg bag during the last three days, which increased from Rs 2350 to Rs 2500 per 100 kg since Sunday. This in turn has pushed up the rates in the retail market to Rs 27.50 per kg and in some areas to Rs 28 per kg. The market supply and demand situation indicates that sugar rates will increase further in the coming days. Experts say that the market will remain hostile in the coming weeks since demand and supply gap was widening with every passing day.
Sources said that sugar industry is using various tactics to increase sugar prices in the market on almost daily basis. Limited supply is one of these tactics. They said manufacturers have managed to streamline market supply in their own way.
An Islamabad-based dealer told Business Recorder that the manufacturers have choked sugar supply to the market by 25 percent during the last one week to create an impression that sugar was short and its rates would remain on the higher side in the coming months.
Experts said that half-hearted government action against a few mill owners was another reason behind the rising sugar prices. They added that after reports of action against mill-owners the middleman and dealers remained away from sugar business during the last two weeks. But they lost this impression and resumed their business again.
Government step to stabilise the rates in the open market by offloading TCP's buffer stock through Utility Stores Corporation (USC) proved a futile exercise. The USC is selling only 7500 tons sugar per month. This meagre quantity can hardly make any difference in the market as the requirement per month is about 0.3 million tons.
Moreover, those who decided quantity for the USC should have better idea of total buffer stocks and the time required to dispose of it at the rate of 7500 tons per month.
The TCP has 0.350 million tons buffer stock and its increased supply could improve the situation. However, at present rate the USC can sell off only 50,000 tons sugar before the start of next crushing season in November.