Some 0.25 million tons of sugar has been smuggled to neighbouring countries including Afghanistan and Iran which may cause severe shortage of sweetener besides witnessing high prices in coming days especially during the month of Holy Ramazan, sources told Business Recorder on Monday.
They said that country is witnessing shortage of sugar that will become more severe in next few months as Trading Corporation of Pakistan (TCP) does not have sufficient quantity of sugar to meet the demands before the start of new crushing season. Prices are direct outcome of demand-and-supply system in free market mechanism; We have not increased rates, says Iskandar M Khan, Director Premier Sugar Mills, adding that the price of sugar is likely to surge by Rs 90 per kg during the month of Ramazan due to scarcity of commodity in local markets.
He said that Iran and Afghanistan too have been facing sugar crisis and in view of upcoming Ramazan bulk quantity of sugar is to be smuggled to these countries. Sources said that Trading Corporation of Pakistan (TCP) would not be able to import sugar in case of facing any kind of shortage in the country, adding that procuring sugar from other countries may take two to three months.
The sources further said that Economic Co-ordination Committee (ECC) has not yet procured sufficient quantities from sugar millers despite their repeated request; millers have been selling sugar at Rs 62 per kg in the market. Sources claimed that the millers, which were earlier demanding the government to procure their surplus stock, now reluctant to release even an adequate quantity of sugar as prices are high in the market. They said when PASMA had forwarded a proposal to government of Pakistan to buy sugar from industry during production months.
TCP should have stored buffer stock of sugar in order to meet any emergency in the country besides sufficient quantity was needed for timely off-loading in the market as and when required, they added. They maintained that with the lower strategic stock being held, traders are now in a position to hoard sugar causing a jump in existing price to at least Rs 80 per kg by July or August 2011.
The sources said it is very difficult to retain the ex-mill prices of January in the month of July as the millers have to pay huge interest to banks due to lethargy of government of Pakistan. Carrying cost of sugar per month is 1 rupee per kg because of increased mark-up rates. Any sugar produced in January and sold in July would mean an additional cost of 7 rupees per kg, told Deoomal Essarani, Chairman Pakistan Sugar Mills Association Sindh Zone.
Sources said that Sugar millers just have a stock of about 1.4 million tons which includes 1 lakh and 25,000 tons in Khyber-Pukhtunkhwa (KPK), 4 lakh tons in Sindh besides millers in Punjab have a stock of 1.1 million tons which is being reduced by every passing day. On the other hand, country's per month consumption is about 4 lakh tons. Sources said that country would face shortage of 6 lakh tons of sugar before start of new sugar cane crushing season. The new sugarcane crushing is likely to be started in November.
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