Sugar prices up as import plan cancelled

Millers say they had advised government to import raw sugar instead of refined so foreign exchange could be saved.

KARACHI: Sugar prices have increased once again after a six-member ministerial team set up by the Economic Coordination Committee (ECC) rejected plans to import 500,000 tons of raw sugar.

Ex-mill sugar prices in Sindh stood at Rs68 per kilogramme on Tuesday after a two rupee increase, according to sugar millers. A similar increase in Punjab has taken the rate to Rs70 per kilogramme.

Millers say that they had advised the government to import raw sugar instead of the refined form so that precious foreign exchange could be saved. Local mills would then refine the sugar procured by the Trading Corporation of Pakistan (TCP).

“If the government decides to import raw sugar instead of refined sugar, they can save about $240 per ton. The money saved can be utilised for flood relief efforts,” Chairman All Pakistan Sugar Mills Association (APSMA) Iskandar Khan told The Express Tribune.

The ministerial committee headed by Federal Minister for Industries and Production, Mir Hazar Khan Bijarani, noted that some areas where sugarcane is cultivated have been damaged. Other areas are expecting a higher sucrose recovery so that cumulatively, sugarcane production may not be affected by the recent floods.

However, the APSMA chairman contended that damage to sugarcane fields could stand anywhere between five to 10 per cent of the total crop and the total yield will be affected by the floods.

He also said that sugar stocks of mills have now almost completely depleted and that the majority of demand will be met by supplies from the TCP until the crushing season commences in November.

On the contrary, sugar millers had boasted stocks of about 800,000 tons at the start of Ramazan.

The TCP has asserted that 81,000 tons of sugar will arrive in the country during the current month, while 74,000 tons and 30,000 tons are expected to arrive in September and October, respectively.

Sugar prices in retail trade have also shot up during the month of Ramazan. Market sources say that speculators had entered the market eyeing heightened demand during the holy month coupled with supply constraints brought on by flooding in Punjab and parts of Sindh.

“There is no way that sugar mills could have exhausted their stocks so quickly,” challenged Anis Majeed, Chairman Karachi Wholesale Grocers Association. “The current price hike does not reflect well because sugar mills should have ample stocks available at the moment,” he added.

Retailers are charging between Rs75 and Rs77 per kilogramme for the sweetener despite the government’s instructions to charge only Rs65.

It is important to note that sugar prices in the international market have dropped during the past week on the back of reports that Brazil’s sugar production is set to increase by 20 per cent compared with the last year.

Published in The Express Tribune August 18^th, 2010.