The much-anticipated and desired drop in the price of sugar became a reality on Saturday as mills flooded the markets across the country with their new production, which helped bring its rate down by Rs20 to around Rs80 per kilo in the retail markets.
"Sugar is being sold at a national average of Rs81 per kg vs Rs102 per kg a month back," Prime Minister Imran Khan said on his official Twitter handle.
"I want to congratulate my team for bringing the sugar prices down through a multipronged strategy."
MashaAllah Sugar is selling at a national average of Rs 81 per kg vs Rs102 per kg a month back. I want to congratulate my team for bringing the sugar prices down through a multi pronged strategy.— Imran Khan (@ImranKhanPTI) December 12, 2020
Dealers at the country’s single biggest wholesale market Jodia Bazaar said that supply of the commodity has increased in the markets while its demand is stagnant.
Talking to The Express Tribune, Karachi Wholesale Grocers Association Chairman Malik Zulfiqar Ali said, "The sugar price dropped after mills threw their new production in bulk into the markets.
"We sold sugar at Rs73 per kilo in the wholesale market today (Saturday) as compared to Rs98 per kg around a month ago," Ali said. "It fluctuated between Rs72-74 per kg during this week."
Almost all the sugar mills, which are estimated to be over 80 nationwide, have resumed production for the new season (FY21). They cannot hold new production in warehouses at this point of time. They have to sell new stock to the market as they stand high in need for cash to pay the sugarcane farmers.
The sugar mills buy cane on cash instead of credit. Mills crush almost all the cane in about four months (Nov-Feb) duration. "The price may go further down during the months when the sweetener is in production. This happens around this time almost every year," the other dealer, who wished not to be named, said.
The Punjab government notified the cane support (minimum) price at Rs200 per 40kg for the season late in October.
The price may even remain on the lower side after the completion of the production season as well. "The government has conducted a crackdown against middlemen in the sugar supply chain earlier this year. As a result, the club of price speculators, which was in operation on sidelines of Jodia Bazaar, was closed down. So there is no investor or hoarder of sugar in the supply chain at present. This suggests the commodity price should be maintained on the lower side going forward," he said.
Besides, sugarcane production is estimated to increase by 15% this year as compared to last year. This means the production of sugar should also improve by 15% this year. The country produced around 5.2 million tonnes in last season (FY20).
The drop in sugar price is big news for economic managers. The development should further tame inflation in the economy that stood elevated at 8.8% at present.
Earlier, the government blamed sugar mills for manipulating and increasing the commodity price at much higher than Rs102 per kilo in the retail markets about a month ago.
The government conducted forensic audit of the mills and suspended export of the commodity as well earlier this year. The measures, however, failed to bring the price down. Rather, they kept moving high.
The price stood at around Rs80 per kg in May and shot to over Rs102 per kg last month. Latently, the government also imported around 150,000 tonnes of sugar to stabilise the price as well.