KARACHI: The retail price of sugar has surged to Rs60-62 a kilogram after the government doled out a Rs6.5 billion (Rs13 a kg) export subsidy to millers in December 2015, when prices were Rs55.

The wholesale price has risen from Rs50-51 in December to Rs56.50 now, but retailers are charging consumers an extra Rs4 to Rs6 per kg.

On Dec 8, the government allowed 500,000 tonnes of sugar exports with a subsidy of Rs13 per kg till March 31, 2016. In the first phase 200,000 tonnes were allowed to be exported by Dec 31 and then 350,000 by Jan 31.

The government earlier allowed 650,000 tonnes of sugar exports with a subsidy of Rs10 per kg. Moreover, a 40 per cent regulatory duty on import of raw and beet sugar was also imposed to protect sugar millers.

Based on these subsidies and incentives, the retail price of sugar fluctuated between Rs50 per kg in January 2015 and Rs65 in the middle of the year.

Despite government’s support to sugar millers regarding subsidies and imposition of 40pc regulatory duty on imports, the commodity’s exports remained unimpressive in view of declining price trend in world markets. However, some companies and traders capitalised on the falling global prices by importing more quantities.

According to the Pakistan Bureau of Statistics (PBS), sugar exports remained nil in November and December 2015. In July-December 2015-16, 20,117 tonnes of sugar exports fetched $9.1 million compared to $98m (204,448 tonnes) in the same period of 2014-15.

In 2014-15, exports stood at 708,968 tonnes ($322m) as compared to 647,333 tonnes ($283m) a year ago.

Imports in July-December 2015-16 went up to 8,153 tonnes ($4m) from 6,437 tonnes ($4.1m) in the same period last year.

In 2014-15, imports stood higher at 10,201 tonnes ($6.23m) compared to 9,824 tonnes ($6.1m) in 2013-14.

Karachi Wholesalers Grocers Association (KWGA) Chairman Anis Majeed said sugar prices actually started crawling up since the government announced subsidy of Rs13 per kg in December 2015.

As international price of sugar is already very depressed compared to local prices, the subsidy of Rs 13 per kg may not prove feasible for exports, he said.

He said some kind of speculation is also going on in the market that prices would rise further on the domestic market.

Sugar production in 2016 season is expected to reach over 5m tonnes while local consumption stands at 4.8m tonnes.

Published in Dawn, February 2nd, 2016