ISLAMABAD: The government has again bowed to the pressure from sugar millers who have taken control of the market with the help of economic managers as prices have increased in a month when demand for the sweetener goes up sharply.
According to officials of the Ministry of Industries, the sugar millers have not only increased prices in the domestic market, but they have also been able to convince the government to increase regulatory duty on the import of sugar. This will make the imported commodity costly in line with the increase in prices of sugar produced in the country.
The Economic Coordination Committee (ECC), in its meeting held on June 17, ignored warnings of the increase in sugar prices after the rise in regulatory duty despite the fact that the sugar market had already destabilised before the advent of Ramazan.
Read: ECC increases subsidy on sugar to Rs5 per kg
It was told that sugar price in the market had risen to Rs61.57 per kg compared to Rs55 to Rs58 before the start of Ramazan.
Earlier in the May 21 meeting, the ECC noted that the retail price of sugar was Rs55 to Rs58 per kg but the cartel of millers quoted an average price of Rs60.40 per kg in response to tenders floated for the commodity’s sale to the Utility Stores Corporation (USC). Even the lowest price quoted was higher than the rate in the retail market.
During the June 17 deliberations, the ECC was informed that sugar price in the domestic market had surged to Rs61.57 per kg, higher than the average price quoted in bids for the Ramazan relief package.
The government announced a subsidy to give an additional Rs100 million to the sugar millers in order to make the vital commodity available at utility stores.
The ECC also gave in to the pressure from the millers and increased regulatory duty from 20% to 40%.
Earlier, the Pakistan Sugar Mills Association (PSMA) had approached the government, arguing that sugar price in the international market had dropped from $450 to $360 per ton and with 20% regulatory duty, imports had become easier for the industrial concerns.
The association asked the government to fix the import trade price of sugar at $600 per ton or enhance customs duty from 20% to 50% along with imposition of anti-dumping duty to save the farmers.
Read: Sugar price: Bitter fight over a sweetener
According to data compiled by the Pakistan Bureau of Statistics (PBS) for July-April 2014-15, the country imported 9,811 tons of sugar at an average price of $580 per ton.
According to the weekly Sensitive Price Indicator of the PBS, the sugar price in the week ended June 11 stood at Rs61.57 per kg in the domestic market, an increase of 17% compared to Rs52.54 in December 2014.
The ECC was of the view that the request for fixing the import trade price at $600 per ton ran contrary to the commitments made under the World Trade Organisation (WTO) framework that prohibited the imposition of minimum import price.
However, Pakistan-bound tariff for sugar under the WTO was 150%. Therefore, an increase in regulatory duty to 50% was maintainable under the rules.
At the same time, it was highlighted that the increase in regulatory duty may push the prices upwards. ECC Chairman Ishaq Dar advised the ministries concerned to take up the matter with the PSMA in order to ensure price stabilisation with the rise in duty.
Published in The Express Tribune, June 24th, 2015.
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