Sugar cartels are planning to once again to reap high profits this year by asking the government to impose regulatory duty on import of sugar. Usually reliable sources told Business Recorder here that though sugar prices in Pakistan are about 30 percent higher than world prices, close to all time high, domestic prices of sugar would further rise in case the government yields to the powerful lobby''s demand.
This would further burden the common man who is already groaning under the pressure of constantly increasing prices of items of daily use, and prove the last straw in breaking the camel''s back. Sources explained that the price of sugar today is around Rs 65 per kilogram, whereas in the international market it is now $550 per ton, C & F Karachi, a decrease of about 30 percent from its peak of $800 per ton.
In contrast, the local mill owners and middlemen have only reduced their prices by about Rs 2 per kilogram, which means that Pakistani consumers are now paying one of the highest prices for sugar anywhere in the world. Yet the powerful sugar lobby, comprising politicians, is asking for regulatory duty so that it could continue to make spectacular profits at the cost of consumers.
This favoured lobby extracts benefits from all corners. For a commodity that sells at Rs 65 per kilogram, the sales tax is only levied on Rs 28.88 per kilogram. Further, the sales tax is not levied at the usual rate of 16 percent, which is applied to other items, but only at 8 percent.
Thus, total sales tax collected from sugar industry is only Rs 2.31 per kilogram, whereas on imports the tax is collected at 16 percent, in addition to one percent excise tax and three percent income tax, etc. Sugar industry is being given protection at the cost of ordinary citizen, sources aid.
Needless to mention, sugar industry has already had two very lucrative years, having windfall profits, historic and unparalleled. Mill owners in the past had taken the plea that they should be allowed to make profits if the international prices are high, but now when the international prices are coming down, they do not seem to be ready to reduce their high profits and bring down their prices a little; rather they are asking the government to impose duties and artificially increase the price of sugar.
Sources said that the argument that sugar millers keep their cost of production high because of the high prices of cane is also not valid. Although it is true that cane prices were higher this year than before, but there was also higher yield and prices of molasses and ethanol, by-products of sugar, are high enough to make cost of producing sugar much less than the international prices.
Sources ask: if the millers'' contention is accepted that the cost of producing sugar is high, then why producers from Dubai to Thailand to Brazil would be willing to sell sugar for Rs 42 per kilogram? It would be interesting to watch as to who wins ultimately--sugar industry or the Pakistani consumer.