Fears of inflation have returned to the country, with the rupee plummeting to a historic low of Rs. 300 against the dollar in a matter of days, but the surge in sugar prices goes beyond currency fluctuations.
Sugar Prices
Sweetener, which is vital across all economic levels, is currently selling for Rs. 170 in some locations, but a further increase is likely before the crushing season.
In the last month and a half, Ex-mill sugar prices have risen by nearly 25% to above Rs. 15,000 per 100 kg, and traders believe that this shock is yet to hit consumers, with strong expectations of a further rise ahead of the crushing season, with Ex-mill prices expected to rise near Rs. 18,000 and sugar sold at Rs. 200 per kg.
The Pakistan Sugar Mills Association (PSMA) argued in a July statement that the primary contributors were an increase in sugarcane minimum support price from Rs. 250 to Rs. 300 per 40kg, a sales tax increase from 17 percent to 18 percent, doubling of markup rates, and increased cost of imported machinery due to devaluation.
Yes, there was smuggling, with unsubstantiated media claims putting the quantity anywhere between 400,000 and 700,000 tonnes.
But official exports continued despite the spike in local costs. Pakistan exported 215,715 tonnes of sugar for $104 million in FY23 and plans to sell another 5,542 tonnes in July 2023.
Former Minister of National Food Security and Research Tariq Basheer Cheema, on the other hand, claimed in last month’s Senate Standing Committee meeting that the sugar stock numbers shared with the government for allowing exports were fudged, and that exports are the primary contributor to the price increase.
It should be mentioned that the said minister was highly opposed to exports before they were approved by the Sugar Advisory Board in January.
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