Market manipulation: Sugar millers set to pocket billions as prices shoot up
Delay in crushing season, export of sweetener lead to price hike.
Stocks for open market will be about 232,000 tons till the end of current month against the monthly consumption of 390,000 tons. PHOTO: FILE
ISLAMABAD:
Sugar millers are set to pocket billions of rupees at the expense of consumers following a decision taken by the Economic Coordination Committee (ECC) that has allowed the mills to delay the crushing season and asked the state-run grain trading agency to purchase 150,000 tons of sugar from the mills.
The ECC has also allowed export of 500,000 tons of sugar to enable the millers to dispose of their unsold stocks.
According to the sources, in the wake of alleged market manipulation, sugar prices in the cities have rapidly gone up to Rs80 per kg as compared to Rs50 in remote areas of the country.
“Sugar millers are set to flood the market with one million tons of ‘black stock’, which is not shown in their books, to pocket billions of rupees prior to the start of cane crushing season later this month,” a source in the sugar industry said.
In a meeting here on Tuesday of the Sugar Advisory Board, comprising representatives of the federal and provincial governments as well as sugar mill owners, the millers could not be able to justify the sharp increase in prices, sources said.
“The sugar price hike is a temporary phenomenon and prices will come down after the start of crushing,” a sugar miller remarked.
Provincial cane commissioners told the meeting that sugar stocks stood at about 882,000 tons, of which 150,000 tons would be purchased by the Trading Corporation of Pakistan and 500,000 tons would be exported.
According to the Ministry of Industries and Production, Punjab has stocks of about 400,000 tons, Sindh 300,000 tons and Khyber-Pakhtunkhwa 23,000 tons.
This shows that 232,000 tons will be left for the open market until the end of November against monthly consumption of 390,000 tons. The ministry of industries claims that the stocks are enough to meet the demand until January.
In a summary dated October 28, the ministry said the mills had 1.829 million tons, which would be enough until March 15 next year.
A member of the Pakistan Sugar Mills Association (PSMA) said the quantity of 500,000 tons would be exported over a period of five months and so far 27,000 tons had been shipped.
In response to the allegation of ‘black stock’ in the market, he said the black stock was released at the beginning of the crushing season and now all stock figures were authentic.
An official of the ministry of industries told The Express Tribune that cane commissioners of provinces apprised the Sugar Advisory Board that out of Rs260 million, Rs170 million was yet to be paid by the mills to sugarcane farmers.
He clarified that the government had linked sugar export with the payment to growers and every mill, which intended to export, would have to produce a clearance certificate to be issued by the PSMA or the provincial cane commissioner.
“There will be no further intervention in relation to the sugar industry until the end of March 2014. After the crushing season comes to a close, a meeting will be called to review the stock position to chalk out a future strategy,” he said.
According to the official, at present sugar stocks stand at 950,000 tons, more than the figures given by the ministry of industries.
He said investors and hoarders were releasing their stocks in the market and making a quick buck, but not the mill owners. “The millers are holding back their stock for export,” he added.
Published in The Express Tribune, November 13th, 2013.
Sugar millers are set to pocket billions of rupees at the expense of consumers following a decision taken by the Economic Coordination Committee (ECC) that has allowed the mills to delay the crushing season and asked the state-run grain trading agency to purchase 150,000 tons of sugar from the mills.
The ECC has also allowed export of 500,000 tons of sugar to enable the millers to dispose of their unsold stocks.
According to the sources, in the wake of alleged market manipulation, sugar prices in the cities have rapidly gone up to Rs80 per kg as compared to Rs50 in remote areas of the country.
“Sugar millers are set to flood the market with one million tons of ‘black stock’, which is not shown in their books, to pocket billions of rupees prior to the start of cane crushing season later this month,” a source in the sugar industry said.
In a meeting here on Tuesday of the Sugar Advisory Board, comprising representatives of the federal and provincial governments as well as sugar mill owners, the millers could not be able to justify the sharp increase in prices, sources said.
“The sugar price hike is a temporary phenomenon and prices will come down after the start of crushing,” a sugar miller remarked.
Provincial cane commissioners told the meeting that sugar stocks stood at about 882,000 tons, of which 150,000 tons would be purchased by the Trading Corporation of Pakistan and 500,000 tons would be exported.
According to the Ministry of Industries and Production, Punjab has stocks of about 400,000 tons, Sindh 300,000 tons and Khyber-Pakhtunkhwa 23,000 tons.
This shows that 232,000 tons will be left for the open market until the end of November against monthly consumption of 390,000 tons. The ministry of industries claims that the stocks are enough to meet the demand until January.
In a summary dated October 28, the ministry said the mills had 1.829 million tons, which would be enough until March 15 next year.
A member of the Pakistan Sugar Mills Association (PSMA) said the quantity of 500,000 tons would be exported over a period of five months and so far 27,000 tons had been shipped.
In response to the allegation of ‘black stock’ in the market, he said the black stock was released at the beginning of the crushing season and now all stock figures were authentic.
An official of the ministry of industries told The Express Tribune that cane commissioners of provinces apprised the Sugar Advisory Board that out of Rs260 million, Rs170 million was yet to be paid by the mills to sugarcane farmers.
He clarified that the government had linked sugar export with the payment to growers and every mill, which intended to export, would have to produce a clearance certificate to be issued by the PSMA or the provincial cane commissioner.
“There will be no further intervention in relation to the sugar industry until the end of March 2014. After the crushing season comes to a close, a meeting will be called to review the stock position to chalk out a future strategy,” he said.
According to the official, at present sugar stocks stand at 950,000 tons, more than the figures given by the ministry of industries.
He said investors and hoarders were releasing their stocks in the market and making a quick buck, but not the mill owners. “The millers are holding back their stock for export,” he added.
Published in The Express Tribune, November 13th, 2013.