LAHORE: The price of sugar goes through the roof as the spectre of smuggling, hoarding and price manipulation takes control of the market: only in post-Eid three weeks, the price has gone up by Rs40 per kilo – from Rs110 to current Rs150 per kg.
The court bestowed this power on millers when it suspended official price notification of Rs98 per kg; it was issued in April this year and suspended immediately on May 4. Along with price notification, the (sugar) Supply Chain Management Order was also suspended two weeks down the line, tying the hands of the government and setting market manipulators free.
Next date of hearing is set for Sept 20, when next crushing season would just be about to start and as per officials calculations, the millers would have minted over Rs50 billion by then through the price exploitation.
According to the food department, the country still has 1.9 million tonnes of stock, which should be sufficient to see the rest of the season through. The country began this season with five million tonnes – 4.4m tonnes last season production and 582,000 tonnes of carry-over.
Sweetener sells at Rs150 per kg; court order, export, smuggling, hoarding behind whopping increase in rate
It was enough to see a normal season through, but “could not afford the kind of manipulation that followed the start of the season,” explains an official of the department.
The first sugar shock came when around 250,000 tonnes was exported. As it was not enough, between 500,000 and 600,000 tonnes were smuggled to Afghanistan and beyond. Both these factors brought the stock to “barely enough” position, creating massive margin for manoeuvring for manipulators. The court orders that suspended price notification and Supply Management Order gave them an opportunity that could only be dreamt of and here is the result, he says adding that price has gone 50pc up in the last two and a half months.
Zaka Ashraf of Sugar Mills Association, however, insists that millers are still making loss. Last year, the sugar cost of production was Rs132 per kg. The average sale price so far is Rs105 per kg. Who is making money, he wonders.
The sugar millers had requested the government to let them export around one million tonnes, they were allowed only 250,000 tonnes – forcing them to sell it at cheaper rates in domestic market, which, in turn, was smuggled and created market chaos. “The government needs to project the whole picture instead of maligning a segment of society or the business spectrum,” Zaka says.
A miller, who did not want to be named for business sensitivity, says the sugar chaos is in fact a crisis of governance. Who controls borders? The millers forewarned the government about higher world prices and clear probability of smuggling. It did nothing. In Afghanistan, sugar sells at double the price of Pakistan. Who and how can it be stopped from crossing over, he asks.
Sugar dealers, like the government officials, differ with the millers’ point of view. “Consider the list of owners and you get the correct answer,” states a dealer from the city. It is a business where political and financial power combines. Those manipulating the market and those supposed to check it belong to the same families and class. In the next four months, with this price, this set of rulers and millers would mint billions and billions over and above their legal profit. After all, elections are around the corner, he concludes with a wink.
Published in Dawn, July 19th, 2023
