PSMA wants deregulation of sugar price

LAHORE: The Pakistan Sugar Mills Association (Punjab Zone) has said that the sugar industry appreciates and supports the efforts of the federal and provincial governments to provide the cheapest sugar to domestic consumers in the holy month of Ramazan and would make discounted sugar available at Rs130 per kilogramme through sale points to be established throughout the country.

About current sugar prices, the spokesman said on Tuesday that sugar prices are mainly controlled by market forces of demand and supply, but sugar market sensitivities are influenced by speculators spreading false and exaggerated news to make money at the cost of consumers, sugarcane farmers and the sugar industry. Such rumour mongering is sponsored by stakeholders of this illegal trade, who emerge as its sole beneficiary. The sugar industry strongly appeals to the government to uproot these elements and take action against speculators for the common good of consumers, farmers and the sugar industry.

After last year’s sugar exports, local prices of sugar went down and remained depressed. No sugar exports are allowed during the current crushing season. The sugar industry of Pakistan is providing the world’s cheapest locally produced sugar in spite of low sugar recovery, low sugarcane yield, and highest taxation and production costs. Meanwhile, any imported sugar would bear a landed cost of over Rs200 per kg as of today and is rising constantly due to crop shortages in India and Brazil.

Inflationary trends have greatly impacted the cost of production of sugar since 2021. The sugarcane purchase price is 80 per cent of sugar cost of production whilst in the crushing season of 2022-23 alone, the minimum support price (MSP) of sugarcane was increased from Rs225 to Rs300 per maund, which was a 33 per cent increase as compared to the previous year. Similarly, the MSP was raised from Rs300 to Rs425 per maund in 2023-24, an increase of 41 per cent. In the current crushing season too, the price of sugarcane has reached Rs600 per maund. The season’s average so far is around Rs500 per maund, which is much higher than the regulated MSP during the last crushing season.

Besides sugar cane prices, sugar mills also have faced other increased costs due to historically high interest rates, rising minimum wages and costs of imported chemicals and spare parts, coupled with carrying costs of 1 Million MT of last year’s surplus sugar, rendering the economics of sugar mills unviable.

The PSMA appreciates the Punjab government’s action of partial deregulation of the sugar sector and also strongly requests the federal government to completely deregulate the sugar sector in order to ensure the survivability of this crucial agri-based industry, which provides import substitution worth $5 billion. The sugar industry would be responsive to a support mechanism for the households consuming 18 per cent of its production and deregulating remaining usage by the commercial and industrial sectors, which themselves are not liable to any governmental price controls.