Sugar price increase blamed on smuggling

Millers claim big leakages via borders due to volatile global market

LAHORE:

Sugar millers have blamed the surge in the sweetener’s price on a highly volatile international market and significant smuggling from Pakistan through its western borders.

“International sugar market is highly volatile where price has reached up to Rs250 per kg. Therefore, there is a lot of leakage from Pakistan borders,” said Pakistan Sugar Mills Association (Punjab Zone) in a statement.

“Pakistani sugar being very popular due to its high quality, and low domestic prices encourage big leakages through western borders.”

The remarks came following reports of off-season rise in sugar prices due to export of the commodity and its shortage in the country, which the association termed “incorrect and far from reality”.

Read FC foils attempt to smuggle sugar

Citing other factors for price surge in the domestic market, the millers pointed to the unpredictable high rupee-dollar exchange rate, rise in petroleum prices, extremely high bank rates, increase in wages, rising prices of other commodities and skyrocketing electricity tariffs.

For the upcoming sugar season 2023-24, they said, estimates showed that sugar production would fall short of consumption demand in the wake of less-than-expected cultivation of sugarcane across Pakistan.

“The government needs to strategise to make up for the deficiency well before time. It is also important to protect our borders to avoid leakages of sugar.”

The millers pointed out that at the end of last sugar season 2021-22, Pakistan had a surplus of about 1 million tons. Keeping that in view, the government allowed export of 250,000 tons with an understanding that export of another 250,000 tons would be permitted later.

However, during the sugar season 2022-23, it was realised that the crop yield was not in accordance with the estimates and expectations, therefore, further export was stopped by the government, they said.

The millers asked the federal and provincial governments to set free the highly regulated sugar sector so it could depend on market forces like rice, maize and other crops and become competitive internationally.

“If overregulation continues, it will result in further reduction in sugarcane plantation and the government will have to spend billions of dollars to make up for the deficiency in the domestic sugar production,” they cautioned.

Published in The Express Tribune, September 1^st, 2023.

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