ISLAMABAD, Feb 15: Sugar prices are expected to increase further next month owing to an overall shortfall in domestic supplies and rising international prices, official and industry sources said.

They said the government had given an indication to private importers who met Prime Minister Shaukat Aziz last week not to let sugar prices come down to a level where their reasonable profit was eroded.

The importers had expressed the fear that sugar imports could lead to a market crash in case local hoarders released their unregistered stocks or the government increased releases from the Trading Corporation of Pakistan (TCP).

The prime minister, said the sources, had assured the importers that the government would keep a close watch on international prices and ensure that domestic market did not fall below ‘reasonable level’.

They said it had been estimated that the international market would face an overall sugar shortage of about 2.5 million tons during the current season and almost half of this gap would be because of Pakistan market.

The importers, however, were asked to make arrangements for import of at least 200,000 tons of the commodity on an urgent basis to check further rise in the domestic market.

Market sources said the traders would also have to import sugar from Brazil because of limited surplus stocks in India.

They said international contracts for deliveries in March had gone up to $480 per ton and would further go up as final estimates of overall shortage become fully clear.

The government has estimated a gap of about 900,000 tons of sugar in demand and supply during the current season while sugar mills expect a shortage of about 1.3 to 1.5 million tons.

Even more worrying aspect of the situation is that the crisis is likely to continue in the coming years owing to an alarming increase in sugar consumption in Pakistan compared to that in the neighbouring countries, the sources said.

Pakistan’s total consumption, on the other hand, is around 3.8 million tons, indicating over 22-kg per capita which is more than double as much the 10.7-kg per capita consumption in 1988.

Official documents suggest that the Pakistan Sugar Mills Association and the ministry of commerce had informed the prime minister in September about 0.5m ton shortage of sugar.