Sugar may hit Rs48/kg, officials warn

ISLAMABAD: Sugar will hit Rs48 per kg by next month, official sources told The News on Saturday.

Instead of raw sugar the Economic Coordination Committee in its meeting on Tuesday would approve import of refined sugar that will cost ex-Karachi around Rs44 per kg as current global sugar rates are around Rs32 per kg, they said.

The government will not be able to avert sugar crisis in the domestic market because it has delayed the decision to import it due to pressure of the sugar barons in the federal cabinet, it is learnt reliably.

Despite an expected decision in the upcoming ECC meeting on February 3 for importing one million tonnes of sugar the shortage and price hike is imminent, official sources said.

According to the minutes of the previous ECC meetings held in December 2008 and January 2009, the Ministry of Industries came up with a summary before the ECC meeting held in December 2008 for seeking approval for the import of raw sugar.

But the Minister of Industries Manzoor Wattoo started opposing the summary of his own ministry, which was initially forwarded to the ECC with his approval, when he saw some other ministers opposing it in the meting, blocking the way to import of raw sugar well on time.

“The Secretary Ministry of Industry was left high and dry,” one official source referred Secretary Industries situation while disclosing details of the ECC meeting held last month.

Irrespective of political divide, both treasury and opposition benches are among powerful sugar lobby who will earn huge profits again now in the PPP regime. The countrymen witnessed sugar crisis during the previous Shaukat Aziz regime and now the PPP is taking steps to convert this sweetener into a bitter pill for 160 million populations.

“Now the ECC will meet next week (February 3, 2009) for according approval to import mainly refined sugar instead of raw sugar and its landed cost in Karachi will be hovering around Rs44 per kg because the existing international prices of sugar stood at Rs32 per kg. The average domestic price of sugar will touch around Rs48-50 per kg in the country by the next month,” said the official sources while talking to The News.

The government, the sources said, cannot import whole one million tonne raw sugar because the sugar mills will stop crushing available sugarcane by March or early April 2009. Now the government is taking decision to import sugar in Feb 2009 so there is no much time available to import only raw sugar, paving the way to import major chunk of sweetener in shape of refined sugar.

Sharing background details of sugar prices in international market, the official said the sugar prices witnessed 15 cent per pound increase since beginning of 2009.

The global output of sugar stood at 168 million tonnes during the financial year 2007-08 compared to 165 million tonnes in 2006-07, registering an increase of 3 million tonnes.

Top three sugar producing countries are Brazil, India and China with production of 32.1 million tonnes, 28.5 million tonnes and 11.5 million tonnes respectively. The top three exporters of sugar are Brazil, Australia and India. Top three importers of sugar are European Union, Russia and Indonesia.

According to estimates of International Sugar Association, production may fall to 162 million against consumption requirement of 166 million tonnes. “So there is already deficit of 4 million tonnes of sugar in international market,” added the sources.

When Pakistan enters the market with demand of one million tonnes of sugar, the prices of sugar in international market will shoot up, which already touched to 15 cents per pound in international market. This will add further pressure to the prices, which may cross 20 to 22 cents per pound when Islamabad will take decision to import one million tonnes sugar.

If the international price of sugar is to translate into rupee term, it stands at Rs32 per kg. The landed price of imported sugar at Karachi will be Rs44 per kg and the sweetener prices in the domestic market will definitely touch Rs48-50 per kg in days to come, the officials warned.