Mansoor Sadiq

The export of surplus sugar and enhanced cost of production have been identified as major reasons behind the recent soaring prices of the commodity in the country. During the last two months, the prices of sugar increased significantly by 40-50 rupees per kilogram, burdening consumers in the domestic retail markets. Following the flour prices, sugar prices have also increased significantly during the last two months. The price of 100kg sugar bag was Rs11,300 two months ago, and with increase of Rs2,300, now it is sold at Rs13,600 in the retail market. Aamir Waheed, a wholesale sugar dealer from Islamabad, told WealthPK that in Nov-Dec 2022, the price of 100kg sugar bag was Rs8500, but with surplus stock in the country, the sugar industry started exporting the commodity, due to which the prices soared in Pakistan.

Sikandar Khan, a senior office bearer from Pakistan Sugar Mills Association, said that farming-related expenditures are one of the major reasons for surging prices of sugar in the country. He said that artificial containment of sugar prices also encouraged smuggling of the commodity, which caused increase in local prices. Highlighting the increased ratio of farming-related expenditures, Sikandar said that increased prices of fertilisers, pesticides, diesel, and transportation costs played a significant role in increasing the sugarcane price, which led to increase in the prices of sugar. As per the data of Pakistan Bureau of Statistics (PBS), Pakistan exported 215,752 tonnes of sugar during February-June (five months) 2023. The decision to export sugar was made on the consistent demand of sugar mills association.

A total of 215,752 tonnes of sugar was exported from February to June 2023, and due to this excessive volume of exports, the average retail price of sugar soared in the domestic retail market from Rs85/kg to Rs150-160/kg, and there are estimates that this price will further skyrocket in the coming months. Meanwhile, as per a report of the Ministry of Commerce, the net sugar consumption stood at over 5 million tonnes, where one-rupee increase per kg meant over Rs5 billion net transfer of resources from consumers. Sikandar also elaborated that there was sufficient stock of sugar in the country, but following the 20% general sales tax (GST) and 28% interest rate, which the millers have to pay to banks, and higher utility costs of sugar also contributed towards escalated prices.

Credit: INP-WealthPk