Sugar mills blame government policy for price hike

PSMA cites closure of FBR portals, state-imposed restrictions on dealers as reasons

The Pakistan Sugar Mills Association (PSMA) has stated that the recent increase in sugar prices is due to the closure of FBR portals and government-imposed restrictions on dealers, including inter-provincial transport bans.

The Wholesale Grocers Association had previously accused sugar millers of driving up prices. They had termed the prevailing sugar price hike an "artificial crisis," alleging that despite a bumper sugarcane crop and imports, there has been a deliberate delay in sugar supply.

The PSMA's statement said that the industry had long warned that portal closures would reduce sugar supply and had alerted the government that such closures would lead to price hikes. The government, however, continued to pressure mills to sell unnecessary imported sugar.

The association added that the majority of the public did not prefer imported sugar. In Sindh, portals were kept closed so that imported sugar at the port could be sold first. Since these restrictions were imposed, the supply of sugar has begun to decrease.

Read: Wholesalers call sugar price hike an ‘artificial crisis’

These measures caused sugar prices to rise, for which the sugar industry is not responsible. In Punjab, district administrations forced mills to sell sugar to government-designated dealers, who then sold it at higher prices in the market for their own profit, the statement added.

The statement concluded that the arrival of new sugar in the market is expected to stabilise prices. It called on the government to lift the unconstitutional and illegal restrictions on inter-provincial sugar transport.

Wholesale Grocers Association Chairperson Rauf Ibrahim told The Express Tribune that the crisis has been "systematically engineered" as only 10% of sugar mills have begun crushing, while the remaining 90% have yet to start operations despite the season being in full swing.

According to Ibrahim, the ex-mill price in Karachi has increased from Rs175 to Rs185 per kg, the wholesale rate has reached Rs187, and retail prices have surpassed the Rs200 mark. In Punjab and K-P, sugar is being sold anywhere between Rs200 and Rs210/kg.

Read more: Portal closure, import policy blamed for sugar price hike

Repeated warnings

A special meeting of the Sugar Advisory Board was held in October, under the co-chairmanship of Deputy Prime Minister Ishaq Dar and Federal Minister for National Food Security Rana Tanveer Hussain to review the sugar market situation, imported sugar stocks, and the closure of the S-Track portal.

In a statement in October, PSMA had said that the government's policy of prioritising the sale of imported sugar and closing the Federal Board of Revenue (FBR) portals for local sugar sales has triggered the recent price surge and supply shortage in the market.

Also read: Sugar industry confirms stable supply, rules out shortage

They informed the meeting that the industry had repeatedly warned the government against importing unnecessary sugar, but about 300,000 tonnes were still imported. Now, the government is struggling to offload imported sugar, and as a result, the sales portals for local sugar have been blocked.

The industry also told the minister that the PSMA had been cautioning authorities for weeks through letters and press releases that keeping the portals closed would lead to shortages and price hikes. However, these warnings were ignored. Representatives had emphasised that the domestic sugar industry was not responsible for the price increase and that dealers and profiteers were the main beneficiaries.