LAHORE, Sept 5: The retail price of sugar has gone up by about Re1 per kilo in the last few days after a decision of sugar mills to what they call control its supply and delay the start of crushing of cane till Dec 15 in view of the surplus stock lying with the mills and dealers.

“We have not formed any formal cartel of the mills as reported in a few newspapers. We are trying to bridge the gap between supply and demand,” a sugar mill owner told Dawn here on Friday.

He said the strategy had paid off dividends, as “it has brought a kind of stability in the market and inspired confidence in the investors who have begun to acquire more stocks in order to make some money at the end of the year.”

Another miller said it was incorrect to say that they had made the cartel, as only 20 to 25 mills had unsold sugar stocks with them. He said as a consequence of an increase in the retail sugar rate, the mills were also getting higher price on the fresh sales. “Our sale price has also gone up by Re1 to Rs18.25,” he added.

The Pakistan Sugar Mills Association had decided over a week ago to commence crushing in the Punjab from Dec 15 to ensure disposal of their unsold stocks and stabilize prices.

According to law, the sugar factories can delay the start of crushing till Nov 30. The PSMA says delay in crushing of cane would also help them recover more sugar that would reduce their cost.

The millers claim that around 700,000 tons of surplus sugar — 300,000 tons with dealers and 400,000 tons with the mills — will be available on Nov 1.

The “glut” in the market has led to depression in the price in the domestic market. The PSMA claims that its members are selling sugar at far below the production cost. They put the break-even price at Rs20-21/kg (ex-mill rate).

They say “the depressed local rates and the government’s failure to help them export surplus stocks have rendered them unviable.”