Sugar crisis in the making

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High sugar prices would put the government in tremendous pressure and would create political problems. In the past, a number of governments faced public criticism due to increase in sugar prices.
The price of sugar has reached Rs78 per Kg in open market and it is expected that in the coming weeks the price would touch Rs85-90 per Kg level, as the country would be facing shortage of 300,000 metric tonnes.
However, the government circles in general and Trading Corporation of Pakistan (TCP) in particular are not ready to accept the ground reality that there will be shortage of sugar and they are insisting that we have surplus stocks. The expected sugar shortage is only because of negligence of the concerned departments who failed to stop smuggling of sugar to Afghanistan and Iran, where sugar price is in excess of Rs100 per Kg. TCP and Ministry of Industries are insisting that there are enough stocks of sugar in the country and there will be no shortage.
The sugar mills are holding around 550,000 to 600,000 metric tonnes stocks while TCP has 200,000 metric tonnes of sugar. If both stocks are added then total stocks available are not more than 800,000 metric tonnes. Out of total available stocks, the sugar mills would use 100,000 metric tonnes sugar for re-melting thus the consumable stocks are 700,000 metric tonnes. The monthly consumption of Pakistan is 300,000 metric tonnes. If we look at the current supplies from the sugar mills and buffer stocks of TCP then we would come to know that the currents stocks would last till end of November, whereas, the fresh crop of sugarcane would arrive in December. The sugar mills would start crushing in the last week of December and fresh sugar would arrive in the market not before January. Thus, the country would not have sugar in December and January and it is clear that either we will either have to face shortage or import sugar.
Currently, the price of sugar in the international market is also high and it is roaming at around $0.80 per Kg and its landed cost at Karachi port is at least Rs85 per Kg and if sales tax and other taxes are added then it would be available for at least Rs90 per Kg.
Ayub Khan’s government faced public pressure because of increase in sugar prices. At that time price of sugar price was increased by Rs 0.02 per Kg. Then Punjab Governor Ameer Muhammad took strong action against the hoarders and brought the sugar prices at previous level. Then another jump was witnessed in Zulfikar Ali Bhutto’s regime. In the last decade, the price of sugar has seen a phenomenal rise. In the start of 2001, the price of sugar was around Rs14-16 per Kg and in 2005, it witnessed a jump and price reached Rs24-25 per Kg. Another hike — one of the biggest hike was observed in 2008-2009, when the price of sugar crossed Rs58 per Kg. At one stage, it was sold for Rs100 per kg but later the price came down to Rs65-68 per Kg. The courts also took action to bring down the sugar prices.
By and large, it is high time for the government to take action against the profiteers and control sugar prices otherwise the situation would get out of control and government would be on the receiving end.