LAHORE: The sugar price shot through the roof on Thursday as wholesale rate touched Rs150 per kilogram in most parts of the country and retail rate up to Rs160kg, with no official control at either level.
In Lahore, wholesale price reached Rs15,000 per 100kg bag as local stocks started drying up and speculative pressure increased on the price. Similar inflated rates, with negligible variations, were reported from Karachi, Peshawar, Rawalpindi and other parts of the country.
In Quetta, the price suddenly rose to over Rs140 per kg from Rs135 per kg.
The sugar price was Rs125 per kg last week and Rs105 per kg a week earlier — a jump of Rs55 per kg in a fortnight.
Explaining the price chaos, an official of the Punjab government said two groups of sugar millers were holding a major portion (of 80,000 tonnes declared stocks) in the province. Both these groups, along with a group of six to seven dealers, are rigging the market.
Market rigging by millers, dealers blamed for steep hike
Though the imported variant is available, the local product is preferred by buyers for being granular and crystal.
“The Punjab government is caught between a restraining order by the court (prohibiting the administration from forcibly lifting stocks of defaulting mills) and realities of the market. It cannot touch the mills’ stocks even if they are behaving like they are. So, these groups are now dictating the market and minting money,” the official said.
There is another dimension, explained a Lahore-based wholesale dealer. “Sindh’s crop cycle is a month earlier than that of Punjab. By that ecological logic, sugar mills in Sindh should start sugarcane crushing a month before Punjab. But they have not done so as yet. The Sindh government is still seeking input from the stakeholders to start its crushing season. So, a month of crushing has gone out of market, hiking ex-mill price to Rs145 per kg on Thursday, to Rs150 wholesale and Rs160 at the retail level,” he laments and says it is an administrative and market collapse.
Another major dealer from Lahore, who also did not want to be named, said that administrative steps taken by the government had scared the dealers away. “Now they buy only what is required for the day, fearing administrative action. The millers, on the other hand, have become more manipulative: offering only a small quantity at grossly exaggerated rates, which are rising almost with every truck load. Those major groups on Thursday offered only five truckloads to major dealers. The millers’ squeeze and dealers’ reluctance have broken the supply chain, rigged market and spelled price disaster,” he says.
“During July to October, the millers sold sugar at Rs105 per kg when official rate was Rs85 per kg and made Rs30 billion in extra cash,” says the Punjab government official. “It now looks that they are out to make another Rs30bn in November alone. The court and millers have turned the administration into a helpless spectator, because the government cannot act against the main source of current chaos (the millers). Once sugar goes into supply chain, it is virtually impossible to check rates as it is then spread to thousands of markets and shops. The millers know that prices will decline once crushing starts, so they are out to fleece as much as they can,” he says.
Published in Dawn, November 5th, 2021