ISLAMABAD, Nov 8: Sugar prices shot up by Rs100 per 100kg bag over the last four days despite sufficient carryover stocks and a record new sugarcane crop of 62.3 million tons, market sources said.
A secretaries’ committee led by Dr Salman Shah, Adviser to the Prime Minister on Finance, however, expressed satisfaction on Thursday over the situation and noted that a massive unregistered buying of about 450,000 tons of sugar had been made by the industry to save sales tax during the just concluded season.
The committee was also informed that the tendering process for the import of 500,000 tons of wheat would be completed by middle of this month and the commodity would land in the country by January next year. It noted that the stock would be sufficient to maintain stability in the market. The meeting was informed that wheat prices had started coming down.
Traders in the local market told Dawn that wholesale prices of sugar had increased to Rs2,720-2,740 per 100kg bag from Rs2,620 early this week. They said that wholesale prices in Islamabad were even higher and stood at Rs2,800. A trader said the prices had increased because of late start of crushing by mills and the government buying of about 25,000 tons of sugar at Rs29 per kg through official tenders.
Dr Ashfaq Hasan Khan, government’s economic advisor, who attended the secretaries’ committee meeting, said the overall sugar stock stood at about 780,000 tons as on Nov 5 and after taking into current month’s consumption, the season was expected to conclude with a carryover stock of at least 480,000 tons, which was a comfortable surplus.
He said the committee was surprised to know that the sugar industry had made an unregistered buying of a huge quantity of 400,000-450,000 tons to evade sales tax and this was in fact real profit margin earned by the mills.
Responding to a question, he said the committee had not been informed about the price increase and claimed that average prices hovered around Rs28 per kg in the retail market and the international market had also fallen to about $276 per ton freight on board (FOB).
He said the food ministry informed the committee that the fresh sugarcane crop was estimated at massive 62 million tons that would translate into sugar production of 4.3-4.5 million tons. After accounting for 3.8 million tons of consumption, there would still be another surplus of 300,000-500,000 tons.
As a result, it would be a ‘buyers market’ next season where farmers would be finding it difficult to get a fair price of Rs67, Rs60 and Rs65 per 40kg in Sindh, Punjab and the NWFP, respectively, fixed last year, with no change this time. Previously, it used to be a ‘sellers’ market’ and the farmers had the upper hand to get a price even higher than the official price.
Dr Khan played down a delay in the start of crushing season and said the Pakistan Sugar Mills Association (PSMA) had informed the committee that 26 out of total 44 mills in Punjab and even larger number of mills in Sindh had started their boilers and it would not be a problem if crushing goes into full gear little late than promised.
He did not agree to PSMA’s claims that Indian sugar leaking out of the Afghan Transit Trade was being sold in the market and said the government had introduced product specifications. Therefore, he said, neither the sale of Indian sugar was possible in the market nor the government could restrict the ATT.
