Sugar prices set to rise again

Sugar price in the country may surge to Rs80 per kilogramme in the next couple of months as huge amounts of sugar have been smuggled to Afghanistan unchecked.
This has been attributed to depressed prices in local markets which have encouraged smuggling to Afghanistan, thus creating a shortage in the domestic market, sources in the Pakistan Sugar Mills Association (PSMA) told Pakistan Today.
Furthermore, as the Economic Coordination Committee (ECC) has not bought sufficient quantities from sugar millers despite their request to at least procure 200,000 to 300,000 tonnes of sugar to facilitate payments to growers, millers have been selling sugar at Rs62 per kilogramme in the market.
It was claimed that sugar millers had no options but to sell existing stock at lower prices as they had to pay for the growers. The association had earlier demanded the government to procure at least 200,000 to 300,000 tonnes of sugar from the millers to facilitate this process and to forestall any future shortage of the sweetener.
The body also asserted that with the lower strategic stock being held, traders are now in a position to hoard sugar causing a jump in existing price to at least Rs80 per kg by July 2011.
However, sources in Trading Corporation of Pakistan (TCP) said that there was at least 350,000 tonnes of sugar stock in the country out of a requirement of 700,000 tonnes. The strategic reserves were necessary to meet any emergency in the country and sufficient quantity was needed for timely off-loading in the market as and when required. Though the issue of sugar procurement from the local millers was yet to be decided upon by ECC which was considering how and what quantity of sugar should be procured from local millers.
According to sources, though the ECC was likely to allow TCP to at least purchase 50,000 tonnes of sugar from the millers, a clear instruction is yet to be received from committee. Additionally, another issue hindering the process is that if the price being proposed by bidders was less than Rs70 per kg, it would create a hurdle for both the TCP and consumers.
Sources claimed that the millers, which are demanding the government procure their surplus stock, were reluctant to release an adequate quantity the price of sugar was high in the market. They also stressed that there was no shortage of sugar presently and that demands in near future would be made through the ECC recommendation.
It is worth mentioning here that the Ministry of Industries and Production (MoI&P) hadearlier urged the government to procure sugar from local mills through Utility Stores Corporation and TCP to build strategic reserves. The MoI&P, sought from PASMA details on the outstanding payment position to sugarcane growers for 2009-10 and 2010-11 sugar crushing season; if PSMA’s proposal for purchase of sugar by the USC/TCP still stands as well as the PSMA’s views on the supply/ demand situation of sugar in the country.
Earlier PSMA, while asking the government to buy at least 200,000 to 300,000 tonnes of sugar from millers to facilitate payments to growers, had informed the government that members of the association were facing tremendous pressure from growers to clear outstanding payments and the only way it could be expedited was through purchases by the government to build a strategic reserve with the TCP at the current ex-mill price of Rs62-63, which was lowest in the world.
The association had also informed the concerned ministry and ECC that sugar output that this harvest had surpassed all previous estimates with Punjab producing 2.6 million tonnes, Sindh 1.3 million tonnes and Khyber-Pakhtunkhwa .262 million tonnes of sugar. Total production has been estimated at 4.1 million tonnes.