PSMA deems sugar price increase as “routine off-season rise”

LAHORE: The Pakistan Sugar Mills Association (PSMA) has dismissed reports of a sugar shortage, characterising the recent surge in sugar prices across the country as a “routine off-season rise.”

Wholesale sugar prices have witnessed a significant increase, with retail rates ranging from Rs170 to Rs180.

Addressing concerns about the current season’s sugar supply, the PSMA warned of a potential shortage in the upcoming year due to low acreage while criticizing excessive regulation.

The association emphasized that the rise in sugar prices is unrelated to the “shortage resulting from the previous government’s permission to allow its export,” according to a spokesperson for the millers’ association.

It was initially anticipated that the sugar season 2022-23 would be favorable for production. However, during the crop harvest, the government realized that the yield was lower than expected. Consequently, plans to permit further commodity exports were shelved.

“The beginning of the sugar season 2022-23 saw Pakistan with stocks of 8.15 million tonnes, including carryover stocks from the previous year, a satisfactory stock position for the entire year with some surplus,” stated the PSMA official.

Despite assertions by the Federal Board of Revenue and other relevant government institutions that monthly consumption stands at 0.65 million tonnes, data indicates that consumption from November 2022 to July 2023 amounted to 5.85 million tonnes over nine months. For the remaining three months, Pakistan is expected to require 1.95 million tonnes, while current stocks in Pakistan total 2.3 million tonnes.

“The notion of a sugar shortage at this point is puzzling,” the spokesperson remarked.

Regarding sugar prices, the PSMA statement noted that the international sugar market is highly volatile, with prices reaching up to Rs250/kg. Consequently, there is significant leakage across Pakistan’s borders, facilitated by the popularity of Pakistani sugar due to its high quality and low domestic prices, which encourages smuggling through the Western borders.

Other factors contributing to the increase in sugar prices include fluctuating dollar exchange rates, rising prices of petroleum products, high bank interest rates, wage hikes, escalating prices of various other commodities, and soaring electricity tariffs.

The PSMA spokesperson called for federal and provincial governments to plan for the deregulation of the highly regulated sugar sector, allowing market forces to dictate prices, similar to rice, maize, and other crops, in order to enhance international competitiveness.

“It is also important to recognize that 70 percent of our total sugar consumption is attributed to the commercial sector, with only 30 percent consumed by domestic consumers, of which 15 percent belong to the economically disadvantaged segment,” the spokesperson added.

Pakistan allows import of costly sugar after millers exported surplus stocks

The government is only concerned about the poor segment of society, and for them, subsidy schemes like the Utility Stores already exist.

Speaking of deregulation and calling it a hurdle in the growth of the sugar industry, the spokesperson also said that the courts were against that over-regulation too.

“If this over-regulation persists, it will result in further reduction of sugarcane plantation and the government will have to spend billions of dollars to make up for the deficiency of domestic sugar production,” he concluded.