The Chairman of Pakistan Sugar Mills Association (PSMA), Javed Kayani, said on Saturday that artificial control on sugar prices would prove counterproductive, like last year. Talking to Business Recorder, he said that sugar price can only stabilise when the supply improves. However, according to him, as an interim step an indicative price would be a step in the right direction, which would mitigate the sufferings of the general public.
The principle of market mechanism, which is driven by supply and demand forces, would in fact determine the price, he added. Pakistan is facing shortage of 1.3 million tons from now onward, but the federal government is still not in a position to ensure imports as the private sector is deeply concerned that if they import the commodity at a higher price and the government set a lower maximum price for the product, they would face huge financial loss.
"With the start of crushing season in about seven to ten days' time, there would be ample supply to saturate the market," Kayani said. There are reports that mills have started crushing in Sindh, and are being supplied with sufficient sugarcane. Sugarcane growers are also demanding higher price, seeing the sugar shortage in the country.
Javed said any artificial control on price would be counterproductive, as in the past, and added that two-tier pricing system of the commodity would only create distortions. The PSMA Chairman dispelled the impression that there was a delay in the crushing season and said that labour, which does the harvesting, loading and unloading, all comes from KP and Northern Areas where floods played havoc and people were busy in rehabilitation efforts. He added that the entire transport is deployed for sacrificial animals. These are genuine constraints, and there is no wilful default.
The government is being criticised for not ensuring supply through the Trading Corporation of Pakistan (TCP) which caused havoc, and the middleman took prices to Rs 125 per kg, he said. The ECC has ended the role of TCP in sugar import which according to some of the market players is not a wise decision.
"In today's prevailing world prices of both raw and white sugar and expected world sugar production, I feel if the government leaves it to the private sector it will be a complete disaster," said one market player.
Analysts claim that TCP did not import sugar according to the plan given by the federal government, which resulted in the current sugar crisis. "If TCP had not imported sugar, prices could have risen to an unimaginably high level. TCP is doing the best job of releasing by tender to public and directly to provinces," he commented.
Recently, TCP Chairman Anjum Bashir was criticised by the PMSA chairman and some federal ministers for not importing sugar on time and releasing sugar stocks. Industries Secretary Abdul Ghaffar Somoro also took on TCP Chairman at the previous ECC meeting for not implementing the decisions of the ministerial committee in letter and spirit.
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