KARACHI, Jan 30: There has been no sentimental impact on the price of sugar in the market after the government’s decision to allow regular import of the commodity from India and other price stability measures, as the price still hovers between Rs35-36 per kg.

The retail price is now tagged at Rs34.50 per kg which had been rising after Eid-ul-Azha. The wholesale price was Rs28 per kg some 10 days back. On Jan 13, the sugar was selling at Rs26 per kg.

There are fears that the price of the commodity may rise further when its demand peaks up in Muharram, starting on Tuesday.

“I do not know what the government is doing for the benefit of consumers,” general secretary Karachi Retail Grocers Group (KRGG), Farid Qureishi said referring to government’s decision last week.

Advisor to Karachi Wholesale Grocers Association (KWGA), Anis Majeed, said that there might be a shortage in sugar production by 700,000 to 900,000 tons this year due to lower sugarcane production.

“The government should had come out with a policy as soon as it became clear that the sugarcane production will fall this year,” he said.

He said millers were saying that they were getting sugarcane at higher rate from the growers. Millers are also not releasing their stocks in the markets and in case some mills are doing it — they are releasing very limited quantities. “To some extent millers can be blamed for sugar crisis in the domestic market,” he added.

He said import was not feasible from any country, even from India, due to high rates. Two weeks back, sugar prices in the Gulf and other parts of the world were quoted at $425 a ton which has now surged to over $460 a ton. Even in India, the sugar rate is being quoted at over $450 a ton, he added.

If sales tax is removed or lowered then it might be feasible to import to bring stability in prices, otherwise it is virtually not workable to import at this moment, he added.

“May be some commercial importers had opened letters of credit for import a fortnight back, but currently no big orders are being placed,” he said, adding that at the price of $425-460 per ton - the landed cost will hover between Rs32-33 per kg, he said.

Anis said that there was still no clear-cut policy of the government on stabilizing sugar prices as importers still feel shivering to imagine the situation when they open L/Cs on a day and the very next day the government announces the subsidy.

Market sources said that vested interests had started piling up sugar stocks after anticipating a shortfall in sugarcane production. They intend to cash on when demand peaks during the first ten days of Muharram.

Increasing supply to utility stores will hardly make any impact as only five to 10 per cent of the population is covered by these stores, sources said.

President Karachi Chamber of Commerce and Industry (KCCI), Haroon Farooki has expressed profound concern on the rapidly rising trend in ex-factory sugar prices, which have gone up to Rs33 per kg, taking the retail price to Rs35, although the ex-mill price of sugar has been officially reduced by one rupee recently.

The soaring price trend during the peak production season (November-March) is, particularly alarming, and a clear indication to a further increase in price at the end of the crushing season.

He alleged that due to the failure of the officials responsible for checking the price hike in the market, some vested interests are making heavy profit by floating rumours in the market.

He urged the government to take notice of illegal activities of the speculators.

Mr Farooki regretted that the prolonged tussle between the sugar industry and sugarcane growers on cane price, is resulting in likely decline in sugar production to 2.7-2.9 million tons, which had already declined to three million tons last year from four million tons in the year 2003-04.

The government, he said, must take immediate steps to arrest this disquieting up-surge in the prices of this essential commodity of daily use, as it can have wide ranging implications.