The price of sugar has continued to edge higher despite huge stocks. The wholesale price of sugar, which was Rs57 a kilogram when sugarcane crushing began in November 2016, has now risen to Rs62 per kg.
The decision of the Economic Coordination Committee (ECC) taken in the last week of December 2016 of allowing sugar exports of 225,000 tonnes has put extra pressure on sugar prices.
Retailers, blaming rising wholesale prices, have pushed up the commodity’s price to Rs64-65 per kg from Rs62 two days back.
The government allowed sugar export from the surplus available after ascertaining that there would be 1.23 million tonnes of surplus stocks available in the country. With a monthly consumption of around 400,000 tonnes, the available stocks are enough to meet consumers’ demand till March.
The ECC also decided that the Ministry of Commerce should ensure that there are adequate checks and balances available to maintain the price stability in the domestic market at the current level. In case stability is disturbed, the ministry would bring a summary to consider suspending sugar exports.
Unlike previous years, it was decided that there will be no freight or export rebate payable by the government to sugar exporters on such exports. Furthermore, only those mills will be allowed to export which have cleared outstanding dues of farmers relating to the last season and have started crushing at full capacity.
However, despite having old stocks, retailers are now minting money in the absence of any effective price-checking mechanism. Price regulators also do not check the available stocks in the markets.
Karachi Wholesalers Grocers Association chairman Anis Majeed argued that sugar millers, not wholesalers, set prices. He urged the government to check millers first as to why prices are going up despite huge stocks.
According to figures of the Pakistan Bureau of Statistics, sugar exports in July-November 2016 remained nil as compared to 20,117 tonnes (fetching $9m) in the same period of 2015.
Sugar imports fell to 5,048 tonnes ($22m) in July-November 2016 as compared to 7,008 tonnes ($3.66m) a year earlier.