Pakistan’s government has planned to buy 100,000 tonnes of sugar from Brazil in September. This development comes after repeated attempts to combat smuggling have met with scant effectiveness.
Government to buy 100,000 tonnes of sugar
The court’s intervention, which prevented the government from fixing retail prices, has resulted in the continuing of smuggling.
The Trading Corporation of Pakistan (TCP) has met with the Pakistani Trade and Investment Counsellor in Sao Paulo, Brazil, to discuss potential sources of white refined sugar.
Given Brazil’s status as one of the world’s largest sugar producers and its history of supplying Pakistan with white refined sugar.
The government is considering either government-to-government (G2G) channels or involving private sector participation, according to a national daily.
Potential Sugar Suppliers
The TCP has formally requested that the trade counsellor contact potential sugar suppliers in Brazil in order to secure a supply of 100,000 metric tonnes for delivery to Pakistan in September 2023.
TCP’s Executive Director
TCP’s Executive Director, Riaz Ahmed Shaikh, conveyed the request in a letter to Waqas Alam, the Trade and Investment Counsellor in Sao Paulo.
Shaikh also included information on possible companies for both G2G and private sector partnerships in the letter.
It’s noteworthy that the government originally permitted sugar exports via ECC in November 2022 for 100,000 tonnes, then increased the amount to 250,000 tonnes in January.
According to official data, approximately 215,000 tonnes of sugar had been shipped by June 2023, with the trend continuing in July before the ECC decided to halt exports yesterday.
“A significant number of sugar mills have already oversold their stocks, promising delayed deliveries even before the crushing season’s commencement.
With three months left to begin the season, the situation is anticipated to deteriorate further,” stated a market consultant.
He also stated that the government’s decision to prohibit exports came too late. As long as worldwide prices grow, the government’s capacity to combat smuggling is restricted.
Sugar Industry Stands
There’s also a good chance that the government will eventually spend nearly as much money on sugar imports as it does on sugar exports. In this entire situation, only the sugar industry stands to profit from the instability.
Despite the government’s permission to export 250,000 tonnes, criminal traffickers managed to send 600,000 tonnes to Afghanistan.
Taking advantage of the price discrepancy. These smugglers bought sugar for Rs. 80/kg and sold it for Rs. 160/kg in Afghanistan.
According to the expert, Ex-Mill Sugar prices have already crossed Rs. 16,000 per 100 kg, representing a 25-30% increase in just a month and a half.
By September, these costs are expected to exceed Rs. 18,000 per 100 kg. Meanwhile, retail rates in certain areas have risen to Rs. 180 per kg.
Wholesalers are also having difficulty sourcing sugar, even at high prices. This means that Sugar is on the verge of breaking the Rs. 200 per kg barrier in the near future.
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