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Tuesday March 19, 2024

USC wants 200,000 tons of sugar amid ramping demand

By Javed Mirza
April 09, 2020

KARACHI: Utility Stores Corporation (USC) scrambles to lift 200,000 tons of sugar from millers and open market – almost 10 times it procured last month – as consumers are thronging the state-owned retail chain stores to buy subsidised sweetener amid its price hike, it was learnt on Wednesday.

Officials said USC wants to procure 200,000 tons of white refined sugar from millers and open market as a marked difference in sugar prices from the retail market and insufficient supplies lengthened queues at stores across the country ahead of Ramazan. USC has already invited bids for supply of 200,000 tons of white refined sugar to be delivered at its zonal offices in all provinces. USC Managing Director Omar Lodhi said the utility stores are selling sugar at Rs67 per kilogram as opposed to Rs80 per kg in the open market.

“Because there is a significant difference between prices of different items in the open market and at utility stores the number of customers at the latter has increased remarkably,” Lodhi said in a statement. The government earmarked Rs50 billion for utility stores and the finance ministry had released Rs21 billion out of the total allocation

An official said demand of all commodities including sugar surged abnormally due to coronavirus-sparked lockdown. “The demand would multiply as Ramazan is just around the corner,” said the official. Sugar consumption increases significantly in Ramazan, while market observers are forecasting further rise in retail prices. Lahore and Rawalpindi would receive 14,000 tons each out of 200,000 tons of sugar to be bought. Peshawar would get 11,533 tons. Around 8,000 tons would be delivered to Karachi and Islamabad each, while the rest would be delivered at other USC zonal offices in the country. Last month, Utility Stores Corporation bought 20,000 tons of sugar.

Pakistan Sugar Mills Association (PSMA) said average retail price of sugar was Rs57.7/kg in 2017 and it dropped to Rs53.85/kg in 2018. In late 2019, sugar price, however, increased after exports and till September that year prices reached Rs70.91/kg, taking the average retail price to Rs64.27/kg. The government had placed ban on sugar exports in February this year only after the damage was already done.

PSMA, in an earlier report, projected sugar production to be in excess of 5.2 million tons for the current fiscal year of 2019/20, and with carryover inventory of 1.39 million tons from 2018/19 total availability of the commodity would reach around 6.6 million tons. Competition Commission of Pakistan underlined the inability of the mills to export sugar at internationally competitive rates as most of the millers were heavily reliant on sugar as a product and could not be diversified – making optimal use of by-products – to reduce costs.

Government departments appear to be lacking in their assessment of price floor by either being unaware of its impact on production of sugarcane, and consequently sugar by not indulging in active forecasting of the same. “The sugar sector suffers from inefficiencies at all levels,” CCP said in a report last year. “Serious efforts are required to design appropriate government interventions, improve sugarcane quality, enhance and diversify production processes, and improve export competitiveness.”