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Sugar prices continue to rise

 Shortfall proves to be a windfall for traders

Aug 28 - Sep 03, 2000

The sweetness of sugar turns into a bitter taste when one has to buy an item of daily use at a fantastic price of Rs. 29-30 per kg (current retail rates). It becomes even more painful when the country, despite having a strong industrial base to produce a respectable size of export surplus has been relegated to a stage where it has to meet sugar requirements through imports. The much-needed foreign exchange is being used on sugar imports in a situation when Pakistan's economy is confronted with acute financial constraints.

According to sugar experts, the sugar prices have jumped in the international market in a short span of time, which is a record, itself. They said upward trend in international sugar prices started from April this year. The sugar price in London market was $179 per tonne on April 2. On April 9 the price jumped to $189 per tonne. On April 3, it rose to $197. The prices took a quantum jump of $215 on May 28. The upward trend in prices never subsided and continued to gain new heights. The price registered another jump at $235 on June 18. It was $258 on July 23 and $272 on July 30. The last price was quoted at $283 per tonne on August 6.

They sounded a note of warning that prices may not go downward even next year in view of the shortfall in production declared by some of the major sugar producing countries like China, Brazil and EEC producers. It may be mentioned that Brazil produces around 21 million tonnes while ECC contribution in sugar production is estimated at 25 million tonnes per annum.

The active players in sugar business sensed the windfall in the air much earlier when the prices have started to rise in international market in April this year. They used delaying tactics for importing the sugar on time to take advantage of their reserved stocks. Experts feel that a buffer stock of 1-1.5 million tonnes of sugar is generally available in the market. Hence the increase in international prices supported by shortfall in local production was turned into a windfall for these hoarders or traders. No amount of patriotism can prevail over the economics, they remarked. An early decision for import of sugar could have averted this unusual price hike situation in Pakistan.


Currently, we have imported around 175,000 tonnes of sugar while 375,000 tonnes is in the pipeline while around 140,000 tonnes of locally produced sugar is already in hand.

According to their expert opinion this entire amount is enough to cater to the domestic requirement. They feel that the situation may not be favourable next year in view of current crop, which is not so healthy due to whether conditions, water shortfall and reduced area under cultivation. They strongly recommended that instead of going into crushing from middle of October, the crushing should be resumed in middle of November to get a better recovery. They estimated that even with the current size of the crop we can get better results if crushing is gone into operation from November. Because late crushing is estimated to add at least one per cent more in sugar production. The crop would be a little bit immature in October, so let the crop grown to its full maturity.

The sugar importers have so far opened L/Cs worth $164 million on C&F basis for import of sugar. It may be mentioned that more than 175,000 tonnes of sugar has already arrived in the country yet the prices of sugar continued to go up in the market. According to market reports, sugar prices are feared to go up in view of increase in dollar-rupee parity which has gone up from Rs. 52 to over Rs. 55. Currently, market sources said that landed cost of the imported sugar is estimated at Rs. 28 kg. Though the government had already reduced duty on import of sugar and also granted other incentives however greed to earn more have thwart all government efforts.

The L/Cs have been opened for import of sugar from China and Thailand, however the delay in shipment of the imported sugar is causing panic among the retailers for further increase of sugar prices.

According to an estimate the total requirement of sugar in the country is estimated around 2.45 million tonnes. The sugar industry even if it runs at 70 per cent of the install capacity can produce over 3 million tonnes per year.


Currently, the stock of local and imported sugar may be enough to meet the local requirement of the commodity till the start of crushing by November this year. It is suggested that by utilizing full production capacity of sugar industry, not only we can meet the domestic requirement but earn a considerable size of foreign exchange through exports. Serious efforts have to be taken to counter the intrigues for crippling down industrial base of Pakistan.

It's a harsh reality that unlike the people at the helm of affairs, a large majority of the people, living below poverty line cannot afford to breakfast with fruit juices. The masses have to start their day with tea and bread. They need some sugar to use tea as the only food item for their breakfast. Buying sugar at Rs. 30 per kg is indeed torturing for the poor.