Sugar millers attribute the recent increase in sugar prices to the highly volatile global sugar market and substantial smuggling activities along Pakistan’s western borders.
As the prices of petroleum products continue to surge, residents of Quetta are grappling with the alarming escalation of sugar prices, which have now reached record levels.
In Quetta, the price of sugar has skyrocketed to Rs195 per kilogram, reflecting an astonishing increase of Rs20 per kilogram.
The situation is equally concerning in Karachi, where sugar prices have surged to Rs165 per kilogram in wholesale markets.
The Pakistan Sugar Mills Association (Punjab Zone) explained in a statement that the international sugar market has experienced extreme price fluctuations, with sugar prices reaching as high as Rs250 per kg. Consequently, there is a significant outflow of sugar from Pakistan through its western borders. Pakistan’s sugar is known for its high quality and is priced lower domestically, which incentivizes substantial cross-border smuggling.
In response to reports of off-season sugar price hikes due to sugar exports and domestic shortages, the association labeled these claims as inaccurate and far from reality.
The millers identified several other factors contributing to the surge in domestic sugar prices. These factors include the unpredictable exchange rate between the rupee and the dollar, rising petroleum prices, exorbitant bank interest rates, increased labor wages, escalating prices of various commodities, and soaring electricity tariffs.
Looking ahead to the sugar season of 2023-24, the millers projected that sugar production would fall short of the consumption demand due to lower-than-expected sugarcane cultivation across Pakistan. They emphasized the need for the government to develop strategies to address this shortfall in a timely manner and to take measures to prevent sugar smuggling across the borders.
The millers also noted that at the conclusion of the previous sugar season in 2021-22, Pakistan had a surplus of approximately 1 million tons of sugar. Taking this surplus into account, the government initially allowed the export of 250,000 tons with the understanding that further exports of 250,000 tons would be permitted later. However, during the 2022-23 sugar season, it became evident that the crop yield did not align with estimates and expectations, leading the government to halt further exports.
The millers urged both the federal and provincial governments to liberalize the heavily regulated sugar sector, allowing it to operate based on market forces, similar to rice, maize, and other crops, and become more competitive on the international stage. They cautioned that continued overregulation would likely result in further reductions in sugarcane cultivation and could necessitate substantial government expenditure to make up for the domestic sugar production shortfall.