Price of sugar rises by around Rs20 a kilo in last fiscal year

Published July 11, 2021
According  to the data of Sensitive Price Index (SPI), sugar prices soared to Rs98-110 per kg in major cities of Pakistan in FY21. — Reuters/File
According to the data of Sensitive Price Index (SPI), sugar prices soared to Rs98-110 per kg in major cities of Pakistan in FY21. — Reuters/File

KARACHI: Despite higher sugar production and heavy imports, consumers paid Rs20-25 more to buy a kilo of the sweetener in 2020-21.

In another development, the wholesale price in Karachi’s Jodia Bazaar rose to Rs100 per kg from Rs92 in the first week of the latest fiscal year, which starts on July 1, forcing the retailers to charge Rs105-110 per kg depending on the area.

According to the data of Sensitive Price Index (SPI), sugar prices soared to Rs98-110 per kg in major cities of Pakistan in FY21 as compared to Rs78-85 in the preceding year.

Increase in sugar price appears surprising amid a 22pc rise in sugarcane production to 81 million tonnes in FY21 as per Economic Survey FY21 from 66.4m tonnes in the same period last fiscal year.

During 2020-21, the sugarcane crop was cultivated on 1,165,000 hectares, an increase of 12pc compared to last year’s sown area of 1,040,000 hectares. The crop experienced a significant increase in area under cultivation and yield owing to favourable weather conditions, better management, timely availability of quality inputs and higher economic returns, the survey said.

22pc production jump, heavy imports fail to bring any relief

In a bid to avert price hike and cover up sweetener shortage in the country, the government allowed imports by the private and public sectors. As a result, total arrival of sugar in 2020-21 also swelled to 280,722 tonnes costing $128 million against 6,210 tonnes ($3m) in FY20.

As per figures of Large-Scale Manufacturing (LSM), sugar production rose by 16pc during July-April 2020-21 to 5.644m tonnes from 4.846m tonnes in the same period last fiscal year.

Despite higher imports and brisk production, consumers took a costly ride of paying high prices for sugar.

Out of total imports, the Trading Corporation of Pakistan (TCP) had imported 131,000 tonnes last year while on July 2 it awarded a tender of 100,000 tonnes to Al Khaleej of Dubai whose shipment is expected to arrive by the end of this month.

On the recent price hike of Rs8 per kg in wholesale prices, Karachi Wholesalers Grocers Association (KWGA) chairman Rauf Ibrahim said “it seems that no government exists as six months have been left in the arrival of the new crop and sugar millers are pushing up the rates.”

He said the government should grill the millers about raising prices and also fix a rate forcing them not to sell beyond that fixed rate.

Mr Ibrahim urged the government to allow tax and duty-free sugar imports of 600,000-700,000 tonnes by the private sector which it did last year under which the private sector imported 150,000 tonnes. “Either the government maintains its writ or open competition in the market,” he said. “Sugar consumption stands at 600,000 tonnes per month. Prime Minister Imran Khan should take notice of rising sugar prices,” he said.

The government has also put sugar in the Third Schedule in the Sales Tax Act in the new budget. As a result, the sales on sugar has risen to Rs18 per kg based on the retail price of Rs105-110 per kg which was Rs10 per kg when GST was calculated at Rs60 per kg retail price, he said, adding a number of inquiries against the stakeholders of sugar including millers had so far proved futile.

“When Pakistan has produced higher quantities of sugar coupled with huge imports then where this sugar has gone,” he questioned.

Published in Dawn, July 11th, 2021

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