LAHORE, Sept 9: The ex-mill price of sugar has gone up by Rs160 per 100kg in the last one week or so following the millers’ decision to reduce supply of the commodity to dealers in order to ‘stabilize its depressed rate’.

The decision to what millers call as ‘control’ supply of sugar and to delay start of crushing of cane till Dec 15 has been taken by the Pakistan Sugar Mills Association in view of surplus stocks lying with the mills and dealers.

The Punjab PSMA says that mills would have surplus stocks of 700,000 tons on Nov 1.

“Mill owners are trying to create an artificial shortage of sugar in the country by suspending its supply,” said a release issued by the Pakistan Sugar Dealers and Traders Association here on Tuesday after its meeting.

The PSDTA alleged that the mill owners were also “delaying the loading of the already sold sugar to the dealers against business norms”.

It said the government needed to take immediate action to save the situation that might arise in the country as a result of suspension of supply of the commodity.

A dealer added the rise in the ex-mill price of sugar to Rs18.90/kg from the previous Rs17.30/kg would cause retail prices to go up by around Rs3 per kilo.

A PSMA spokesman said the mills had not stopped supply of the commodity.

“The mills are seeking just to bridge the wide gap between the supply and demand to bring a sense to the market and to stabilize the prices. If we don’t do it, we would be rendered unviable that may cause many mills to default on their bank loans,” he said.

The millers admit that ex-mill and retail prices of sugar have gone up as a consequence of the new strategy adopted by them, but added they were still unable to break even their production cost, that is Rs20-21/kg (ex-mill rate).

They attribute the depression in the sugar prices to the “glut in the local market due to failure of the government to help them export their surplus”.

They maintain that their decision to delay production this year would help them clear their stocks, and also stabilize the prices in the domestic market.