Price hike not caused by exports: PSMA

Millers say they have sold sugar below production cost

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LAHORE:

Pakistan Sugar Mills Association (PSMA) – Punjab Zone has denied that sugar prices have increased due to exports of the sweetener.

In a statement, a spokesman for the association said that some misconceptions had been raised in media by linking the sugar price hike with exports without establishing facts.

Owing to a conservative approach, he explained, the sugar industry was not given export permission timely, which caused liquidity issues for millers. At the end of September 2024, the industry had two years of surplus sugar production in pipeline (approximately 1.5 million metric tons valuing at Rs250 billion), which was pledged with banks at nearly 25% interest rate.

The commodity was kept "notwithstanding the fact that the storage life of sugar is only two years and after that it becomes unfit for human consumption," he said.

The spokesman pointed out that it was agreed with the government since the time of first export permission that ex-mill sugar prices would not exceed Rs140 per kg during the export period. However, due to huge surplus stocks, the ex-mill prices continuously remained much below the benchmark for many months. "Almost 50% of the total available sugar was sold below the cost of production, causing losses to the industry."

Since the start of current crushing season, he claimed, it became evident that sucrose content and the overall yield of sugarcane crop had dropped significantly due to pest attacks, inclement weather and the effects of global warming. He said that the rates of sugarcane had risen considerably as growers received Rs650 per maund.