Pakistan’s sweet tooth continues to hurt

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ISLAMABAD: Consumers will have to brace for another year of inflation in sugar prices, as the latest official estimates project a shortfall of 1.3 million tons in the domestic sugar output during the current season of 2010-11.
The decline in this year’s sugarcane production is expected to raise prices on the domestic market. If no timely measures are adopted, then the price of sugar is expected to exceed Rs 75 per kilogram during the crushing season, official sources indicated.
The estimates of the Ministry of Industries and Production determine that domestic sugar production will be approximately three million tons, while the local requirement will be at least 4.3 million tons during 2010-11. This realisation forced the Economic Coordination Committee (ECC) on September 21 to allow the duty-free import of raw sugar by the private sector.
The sugarcane acreage has declined from 943,000 hectares in 2009-10 to 853,000 hectares in 2010-11. The sugarcane production is expected to decline to 44.5 million tones this year, with an estimated sugar output of 3 million tons, as compared to last year’s production of 49 million tons of sugarcane that yielded 3.1 million tons of processed product. Cultivation levels have fallen not only due to loss of cultivatable areas but also excessive manipulation of growers at the hands of influential sugar mills in recent years.
Officials disclosed that the ECC did not impose any limit on raw sugar imports, as the government wanted the prompt start of crushing by the end of November. The sugar stocks imported by the Trading Corporation of Pakistan (TCP) are expected to last only till the end of November.
The import of raw sugar, for the industrial and commercial consumers, the latter consumes 70 percent of domestically refined sugar, will force the sugar millers to start the crushing season shortly. The raw sugar import will hopefully contain any hike in local prices by the hoarders, they added.
Sugar prices are expected to remain on the higher side, as the current import price of raw sugar is around $ 566 per ton including transportation costs. This makes price of commodity at port without taxes is Rs 56 per kilogram. The cost of refined sugar in international market is over $ 666 per ton FOB. The cost of refined sugar at this moment, rises to Rs 75 per kg after taxes.