ISLAMABAD: Sugar price within the past three months registered an increase of Rs40 per kg in the retail market, ie, from Rs100 to Rs140 per kg, while in the wholesale market, the commodity price has jumped from Rs4,500 per 50-kg bag to Rs6,500 per bag, reflecting an increase of Rs2,000 per bag.
Business Recorder has observed that in the past three months, the commodity prices kept on steadily increasing in the range of Rs100 per bag to Rs200 per bag weekly which now reached to the highest level of Rs6,500 per 50-kg bag.
The increase in sugar prices is contrary to the recommendation of the Sugar Advisory Board (SAB), the Ministry of Food Security and Research (MNFS&R) which has set the retail price of sugar at Rs98.82 per kg across the country in April 2023.
Sugar retail price goes up by Rs20/kg in a month
Last year in November following an increase in sugarcane support price from Rs230 to Rs300 in Punjab and from Rs250 per to Rs302 per 40kg in Sindh it was expected that the sugar price may go up. In March 2023, Manzoor Wassan, the Adviser to the Chief Minister Sindh on Agriculture said that the Sindh government has decided to fix the rate of new sugarcane crop at Rs450 per 40kg, if the Sindh government approved and implemented the decision it will take the commodity retail prices to cross Rs150 per kg mark.
According to a notification, the Government of Pakistan has implemented the “Price Control and Prevention of Profiteering and Hoarding Order, 2021” under the “Price Control and Prevention of Profiteering and Hoarding Act, 1977 (XXJX of 1977)”, in accordance with Sections 3, 4, and 6. The order was issued on August 24th, 2021 through SRO No 1062(1)/2021 and SRO No 1065(1)/2021, and it includes white sugar in PART-II of the schedule and sets the price of white sugar based on the recommendations of the SAB.
The notice explains that the price of sugar has increased by an unprecedented percentage of over 30 per cent in the current month. Therefore, it is in the best interest of the public to regulate the price of this essential commodity to protect consumers. Furthermore, the notice disclosed that during its 6th meeting on April 17th, 2023, the SAB approved the sugar price that was calculated by the MNFS&R.
Concerned Pakistan Sugar Mills Association (PSMA) and provinces were also instructed by the SAB to provide their feedback on the intended sugar price, as per Sections 3 and 6 of the Price Control and Prevention of Profiteering and Hoarding Act, 1977, and SRO 1062(1)/2021 dated August 24th, 2021.
The PSMA and provinces were requested to submit their feedback and comments by Thursday, April 20th, 2023. However, the PSMA requested for more time instead of providing comments on the costing, which goes against the larger public interest. In accordance with the SAB’s advice, the provinces’ data and other relevant government agency information were reviewed before making the decision. Lastly, the notification informed that under the Price Control and Prevention of Profiteering and Hoarding Act, 1977, and the provisions of regulations 3 to 5, along with Part II of “Price Control and Prevention of Profiteering and Hoarding Order 2021”, the Controller General of Prices has fixed the maximum retail price of locally produced white crystalline sugar at Rs98.82/kg.
When contacted, Pakistan Sugar Mills Association (PSMA) office bearer Iskandar Khan said that there are various reasons behind the increase in sugar prices. He said that artificial containment of sugar prices led to the smuggling of the commodity which locally increase the prices. An increase in fertiliser, pesticides, diesel, water, tractor, and other farming-related expenditure has also played a significant role in increasing the sugar cane price which led to an increase in sweetener prices. He said that the area under sugarcane cultivation has declined by 10 per cent.
Moreover, the increase in sugarcane prices from Rs230 per 40kg to Rs300 also played a significant role in the price hike of the commodity, saying, at present, the ex-factory sugar price is hovering around Rs130 per kg. Pakistan has sufficient stocks of sugar, but owing to 20 percent general sales tax, 28 percent interest rate which sugar millers are paying to banks on working capital, high utility costs, high transportation costs and smuggling has played a major role in escalating the sugar prices in Pakistan. He said that at present, cheapest sugar was available in Pakistan while globally it costs Rs300 per kg, adding that next year, the government is mulling to set sugarcane price at 450 per 40 kg, which will take ex-mill price Rs150 per kg.
It merits mention that the sugar industry comprises six percent of the manufacturing sector and 13percent of the crop economy. The sugar sector provides direct employment to one million people and has a market size of Rs501 billion as of 2021.
The government has continuously increased the support price on sugarcane from Rs126 per 40kg in 2011 to Rs300 per 40kg in 2022 to incentivise the farmers to increase sugarcane production. Since 2011, sugarcane production in the country has shown a cumulative growth of 36 percent compared to a 42 percent growth in the demand for the commodity.
Also, sugarcane cultivation as a percentage of the total cropped area increased from 4.3 percent in 2011 to five percent in 2021. However, the total cropped area in the country has remained stagnant for the last four years, while the sugarcane cultivation area has declined recently.
The sugarcane farmers face delays in payments and low income due to the seriously low price paid by the mills compared to the support price announced by the government.
Copyright Business Recorder, 2023
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