The Punjab government's intervention ended on Monday in connection with the supply of sugar to the domestic consumers at the rate of Rs 40 per kg at the expiry period of November 30, fixed by the Supreme Court. Therefore from Tuesday (today) December 1, sugar will be sold on commercial prices in the province and its rate may go beyond Rs 55 per kg.
However, as directed by the federal government the utility stores will continue supplying the commodity to the consumers at the price of Rs 38 per kg till December 25, 2009. Punjab Food Minister Nadeem Kamran told the media that the government had distributed all stocks of sugar acquired from the sugar mills on November 27 before Eid-ul-Azha and now there is no leftover stock of commodity for supplying to the dedicated retailers in the province.
He said that the sugar mills are free to fix their own rates in accordance with the cost of their sugar production and profit margin in the country and the government has no control on it. Earlier, the sugar mills were selling sugar to commercial concerns at Rs 49 per kg. A general manager of a sugar mill told Business Recorder that the sugar mills will hopefully start crushing of sugar from Tuesday (today) after the Eid holidays but the sugarcane is in short supply.
"The government has fixed the sugarcane support at Rs 100 per 40 kg, but the growers are reluctant to sell their produce at this rate, as they know very well that the raw material is in short supply and the mills will be forced to pay a much higher price to run their mills", he analysed the demand and supply economic theory. He said that some mills purchased sugarcane at Rs 120 per 40 kg on Monday, but the prices are likely to go beyond Rs 150 per 40 kg resulting into sugar price hike.
There are more than 42 sugar mills in the province with the production capacity of five million tonnes of sugar during the three-month long crushing season. However, the country's total sugar production is expected to be 3.5 million tonnes against its annual consumption of 4.3 million tonnes. Sugar industry sources said that though the Prime Minister had indicated to buy 30 percent of the sugar from the sugar mills for ensuring its supply to the domestic consumers at subsidised rates for the utility stores, yet the federal government had not announced the modalities for the execution of the decision.
They said that the industry is also facing equity crunch, as some mills could not clear their bank dues in October. The State Bank had fined them, as it is mandatory for the mills to clear their dues before obtaining new loans for the crushing season.
Meanwhile, Chairman Competition Commission Pakistan (CCCP), Khalid Mirza told Business Recorder that he has not closed the "cartelisation" case of the sugar mills with regard to fixation of sugar prices. "I accepted the All Pakistan Sugar Mills Association (APSMA)'s request to take a lenient view of their previous conduct and gave them a two weeks time to remit their submissions," he added. Mirza said that APSMA's case would be heard in a couple of days.