I would like to request the ECC or Pakistan Sugar Mills Association or Finance Minister Ishaq Dar to please explain to the people of Pakistan the benefits the country will receive with the export of 500,000 metric tonnes of sugar.
Due to worldwide surplus production of sugar, the international price of sugar has dropped down to 320$ per tonne, that is almost equal to 34 Rs per KG. While in Pakistan we have to pay 54 Rs per KG for sugar. This means that the sugar mills will be selling the sugar at a lower rate than what the citizens of Pakistan pay for sugar and will also be generating a very small amount of foreign exchange for the country.
And to add insult to injury, the Finance Minister Ishaq Dar has also allowed a 25 per cent tax on all imports of sugar, so we the people of Pakistan are not able to get the cheap surplus sugar available from India, Brazil etc.
Every citizen of Pakistan, I included, would like to know why the Government of Pakistan and Pakistan Sugar Mills Association (PSMA) are colluding together to create a fake monopoly that increases the sugar price for Pakistanis from Rs 32 to Rs 54, a 68 percent increase.
ENGRY SHAHRYAR KHAN BASEER
Peshawar
International rate of sugar is $418.90 whereas you mentioned $320. You don’t have to be economist to understand the benefits of exports but it needs a little common sense.
Regards
loot and plunder brigade-
While unrestrained profit making by sugar mills needs to be checked, the reason for higher prices may be due to the higher support prices for sugarcane fixed by the government which is done to benefit the farmers.
Sugar mills have been under immense financial pressure due to prolonged oversupply (4years in a row) and these measures were required to safeguard the interests of all stakeholders which include small farmers who need to get paid on time, employees, traders and mill owners. Some mills in Punjab where recovery rates are low have been unable to pay farmers on time due to lower sugar prices and have been selling sugar at a loss.
The excess sugar will be sold most probably in Afghanistan where sugar prices are higher. Moreover one can expect sugar prices of atleast PKR 55-56/kg next year for the following reasons: firstly support prices for cane have been increased by PKR 10/md which will increase the cost of sugar produced by PKR 2.5/kg at an average recovery rate of 10%. The cost increase per kg will be higher for mills in north Punjab and KPK that have lower recovery rates. Along with the increase in support prices the international prices of Ethanol have fallen from USD 850 to USD 750 and this will put pressure on the prices of molasses next year. The price of molasses could drop to PKR 8000/ton from PKR 10,000/ton and this will increase the cost of sugar by another PKR 1/kg.
This increase in sugar prices will not lead to any increase in the profit of sugar mills that are already earning at a very low ROE.
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