High sugarcane prices blamed for pricey sugar

LAHORE: Pakistan Sugar Mills Association (PSMA) on Tuesday blamed high sugarcane prices for rising cost of sugar production and price increase for consumers.

A spokesman of PSMA said present ex-mill prices of sugar are in the range of Rs88 and Rs89 per kilogram instead of Rs100/kg.

Middlemen were fleecing millers and farmers of sugarcane. They purchased the standing crop in certain areas and made cash payment to certain farmers, causing artificial rise in sugarcane prices, he said.

“Sugar millers are bound by the government to make payment through the banking channel and are forbidden to make cash payments,” said the spokesman. “This middlemen mafia in sugarcane was created after the elimination of zoning system in the 1980s.”

During the ongoing crushing season, average sugarcane price remained around Rs300 per 40kg.

Sugar millers have been warning of sugar price increase due to the failure of the government to ensure smooth supply of sugarcane on the support price of Rs200 per 40 kilograms.

Last month the Economic Coordination Committee (ECC) of the cabinet allowed private and public sectors to import 800,000 tons of sugar to bring down its prices and build up carryover stocks. The ECC also allowed import of 300,000 tons of wheat to create strategic reserves before the arrival of the next crop in the coming April/May period.

The private sector has been allowed to import 300,000 tons of sugar at reduced rate of withholding tax from 5.5 percent to 0.25 percent. The Trading Corporation of Pakistan will import 500,000 metric tons sugar at reduced withholding tax rate while 17 percent sales tax has also been abolished. The government wants to procure sugar within the domain of the public sector as it is trying to possess more sweeteners at cheaper rates available in its stocks before coming Ramazan. PSMA spokesman said sugar mills cannot run on small quantities of sugarcane. They need certain quantities to run mills on a certain viable capacity.