Millers blame high sugarcane rates for price hike

LAHORE: The spokesperson for the Pakistan Sugar Mills Association (Punjab Zone) has said that some individuals, driven by short-sighted considerations, are creating misunderstandings by linking sugar prices to exports.

In a statement issued on Friday, the spokesperson said that the sugar industry has consistently clarified that the rise in prices is not attributed to exports. As of the end of September 2024, the industry had a surplus of two years’ worth of sugar production in the pipeline (approximately 1.2 million metric tons valued at Rs250 billion), which had been pledged with banks at an interest rate of nearly 25 per cent.

The spokesperson argued that had the government not allowed exports, Pakistan’s sugar industry, which provides $5 billion in import substitution and has the world’s cheapest sugar, would have collapsed. Exports were eventually permitted after considerable delays and after verifying the surplus stocks through multiple government sources.

Furthermore, in June 2024, an agreement was reached with the government that the ex-mill price of sugar produced during the 2023-24 crushing season and any carry-over would remain at Rs140 per kg during the export period. The spokesman added that the cost of producing sugar, which is largely dependent on sugarcane prices, varies with each crushing season. This season, growers received historically high rates for sugarcane, reaching up to Rs750 per maund, which has provided sustainability for them and the agricultural sector, with the prospect of better sugarcane crops in the coming years. Therefore, the suggestion to link sugar prices solely with exports is seen as biased and unjustified, the spokesperson said.

The official further noted that sugar prices have been influenced by market forces, including media campaigns led by the ‘satta mafia’, hoarders, and kiryana merchants seeking to earn undue profits. He explained that the current price, agreed with the government, is in the best interest of consumers for one month, until April 19. Domestic consumers can purchase sugar at a concessional rate of Rs130 per kg at 274 established stalls.

The sugar industry has long been advocating for the appointment of independent cost auditors to verify and audit the cost of sugar production to ensure greater transparency and acceptance among all stakeholders.

The industry has also urged the government to implement a two-tier pricing mechanism, as 80 per cent of sugar is consumed by the commercial sector and 20 per cent by domestic consumers. The commercial sector remains unregulated and exempt from price controls. The sugar industry has expressed its willingness to work with the government to devise a support mechanism for domestic consumers.