Sugar price to increase to Rs38 per kg: PSMA

KARACHI: Sugar mills have indicated that the selling price of sugar will be Rs38 a kilo with the fixation of sugarcane price by the Sindh government at Rs81 per 40kg.

According to an announcement of the Pakistan Sugar Mills Association (PSMA) Sindh Zone here on Monday, the retail price of sugar was Rs29.50 a kg last year on the basis of sugarcane price of Rs67 per 40kg.

Agreeing to the new minimum fixed price of sugarcane, the association said that due to the abnormal rise in prices of fertilisers and fuel coupled with increases in other costs, the production cost of sugarcane has edged up.

“This was necessary to compensate the growers. However, this surge in the minimum price of sugarcane will have its effect on the price of sugar in the open market”, PSMA said. It said raw material (sugarcane) in sugar manufacturing cost is more than 75 per cent and minimum price of sugarcane has been increased by 30 per cent as compared to last season.

Other elements of cost have also shown hikes. Minimum wage of unskilled workers has been raised from Rs4,500 to Rs6,000 per month showing a rise of 113 per cent as from July 1, 2008 which will have its full effect now while financial charges surged to 150 per cent as compared to last year.

In addition, general increase in other cost elements and especially of petroleum products is unprecedented. All these factors will scale up production cost of sugar which ultimately will have to be absorbed by consumers.

PSMA said sugar industry has a little role in price mechanism as almost 92 per cent of cost element (75 per cent cost of raw material and 17 per cent sales tax and special excise duty) are beyond the control of the industry.

source:thenews