LAHORE: The sugar price started sliding on Wednesday as Punjab began checking, what it calls, “slippage to Sindh” and reverse flow improved supplies in cities like Lahore, where price hovered around Rs100 per kilogram – a decline of 30 per cent in the last three days.

Zaka Asharaf, chairman of the Pakistan Sugar Mills Association, however, attributes it to changing market sentiment following their meeting with the federal government and the industry’s readiness to start crushing season on the announced dates.

The prime minister directed Adviser on Finance Shaukat Tareen to resolve issues faced by the industry and the industry promised to cooperate. “Tareen, however, had promised to withdraw official notification of price yesterday, which has not been done so far. He promised it following the decision that the government will not interfere in the market and let demand and supply mechanism play its part. We are waiting for the withdrawal of notification for the last 24 hours,” he told Dawn.

He counted repairing supply chain as second factor contributing to price decline. “The government held many dealers – the most vital link between the millers and market – and broke the supply chain. Who would carry the commodity to market if dealers are arrested? With their release, supply chain got restored and price started easing.”

“Punjab’s check on slippage certainly contributed hugely to price fall, but other factors have also played part,” explains one of the dealers in Lahore. The government machinery also forced the millers to release their stocks at an officially declared price, and they did.

“The millers, hard pressed between administrative machinery and nearing start of crushing season, which makes hoarding more of a risky liability, had no option but to throw sugar in the market. The only question was price. The millers wanted it on their own, or what they call, rates and the administration wanted it on officially declared price. So, the entire dispute was about price, not supplies. At this point, two variables helped price dip: official pressure and market realities.”

“For the last few days, the Punjab government has also spread supply points,” says Rana Ayub – a dealer from the city. Even imported sugar, which being sold only two dealers in the major market (Akbari Mandi) in Lahore, is now available at every wholesale market. All other supplies of local sugar are going to major stores in Lahore. “In the next two to three days, the market should drop to Rs90 per kilogramme for both varieties – local and imported,” he hoped.

“The majority of millers in south Punjab are getting ready to start their mills by Nov 15, which should further help price come down,” says an official of the Punjab government. By the month end, he thinks, the price should decline to Rs90 per kilogramme as all 74 mills start their operation after Nov 20. Hopefully, the price would decline to Rs80 to Rs85 per kilogramme by the start of next month, unless, of course, the millers have any other trick up their selves, he predicts.

Published in Dawn, November 11th, 2021