Trade Corporation of Pakistan (TCP) has decided to buy buffer stocks of sugar at the wrong time, sources told Pakistan Today on Monday. They added that TCP should have bought sugar stocks three months ago when the price of sugar was low.
They said that the price of sugar in March and April was at least Rs3 per kg less than the current price. The sugar prices these days are around Rs68-70 per kg whereas three months ago the price of sugar was Rs65-66 per kg. The TCP would have to buy stocks at higher rates, the sources said, adding that there is a shortage of sugar in Pakistan and consequently prices are going up. According to rough estimates by the sugar industry, around 250,000 to 300,000 tonnes of sugar has been smuggled to Afghanistan creating a shortage in the country. “A report prepared by USAID has forecasted a shortage of 225,000 tonnes in Pakistan,” said a source.
TCP expects that it would buy sugar for Rs60-62 per kg from the market. It has decided to buy 300,000 tonnes of sugar for buffer stocks and the tender for buying sugar will be floated in the coming days. However, stakeholders in the industry believe that if these tenders were opened in March when the prices were low TCP could have saved more. They said that it is not possible that TCP would get sugar at the prices it expects.
It is also pertinent to mention that government agencies are still using old data of sugar consumption in the country to predict 4.2 million tonnes of sugar consumption. “The sugar consumption data is at least four years old whereas our population is increasing at three per cent per year,” said an official adding that sugar consumption must be at least 4.4 million tonnes and there is a shortage of at least 300,000 tonnes. “Looking at the demand and supply gap of sugar, it can be estimated that sugar prices would increase and TCP should have bought buffer stocks earlier,” he said adding it is the need of the hour that we check our consumption according to current population.
Another reason for the increase in sugar prices is the high price of sugarcane. “The millers have to pay Rs180-200 per metric tonne for sugarcane in the current season and the cost of producing sugar has thus increased,” said a sugar mill owner adding that smuggling to Afghanistan is also affecting the price of sugar. He said that the price of sugar at the time TCP floats the tender is difficult to predict. “TCP should have seen this coming and acted on time” he added.
