According to the data of Sensitive Price Index, sugar prices soared to Rs98-110 per kg in major cities of Pakistan in fiscal year 2021 as compared to Rs78-85 in the preceding year. Thus consumers have to pay Rs20-25 more.
Touching upon why the sugar prices increased, Iskandar Khan, Central President of Pakistan Sugar Mills Association, said “when mills buy expensive cane from the middleman, automatically sugar prices rise. So later it’s found that the recovery of sugar cane will be reduced this season. In the present price of sugar, 80% is the price of sugarcane.”
“We pointed out in a letter to the government that if you don’t control the price of sugarcane, it will become an uncontrollable issue. There will be a shortage in the country and the price of sugar will increase,” Iskandar Khan added.
In a bid to avert price hike and cover up sweetener shortage in the country, the government allowed imports by the private and public sectors.
The total arrival of sugar in 2020-21 swelled to 280,722 tonnes, costing $128 million against 6,210 tonnes ($3m) in fiscal year 2020. As per figures of Large-Scale Manufacturing, sugar production rose by 16% during July-April 2020-21 to 5.644m tonnes, from 4.846m tonnes in the same period last fiscal year.
Despite higher imports and brisk production, consumers took a costly ride of paying high prices for sugar.
The wholesale price in Karachi’s Jodia Bazaar rose to Rs100 per kg from Rs92 in the first week of the latest fiscal year, which started on July 1, forcing the retailers to charge Rs105-110 per kg.
Sugar wholesalers think price increase by sugar mills should be controlled. On the recent price hike of Rs8 per kg in wholesale prices, Karachi Wholesalers Grocers Association (KWGA) Chairman Rauf Ibrahim said the government should grill the millers about raising prices and also fix a rate forcing them not to sell beyond that fixed rate.
In addition to controlling the price of each part, experts suggest that the major way to reduce sugar price is to continuously increase planting area and yield of sugarcane. During 2020-21, the sugarcane crop was cultivated on 1,165,000 hectares, an increase of 12% compared to last year’s sown area of 1,040,000 hectares.
Besides, high quality and stable equipment will greatly improve sugar production efficiency and quality. Many Pakistani sugar mill producers said that many industrial machines and equipment were imported from China with inexpensive price and they were easy to use.
“When I cultivate sugarcane, I have to hire laborers for which I have to pay 5,000-6,000 rupees per acre, and if a machine comes from China in which we can put sugarcane and it cultivates it, it will become cheaper. By this, he who has to cultivate one acre will be able to cultivate two acres,” said Khadim Hussain, a sugarcane farmer.
As to how the government and the market adjust the price of sugar in the next step, Cheng Xizhong, visiting professor at Southwest University of Political Science and Law, put forward three suggestions.
“The first is to completely liberalize sugarcane and sugar market with market orientation in mind. The second is to introduce foreign advanced management to break the long-standing monopoly of family business in Pakistan. The third is that the government is responsible for formulating relevant laws and regulations, promulgating major policies, and guiding market behaviors.”
Source: China Economic Net