Sugar smuggling to Afghanistan may create shortage

LAHORE: There can be a severe shortage of sugar, as around two million tonnes of sugar has been smuggled to Afghanistan under the guise of gur export, industry sources told Daily Times on Friday.

They said that the government has banned sugar export around four months back to meet the local demand but remained reluctant to ban gur export. Now the smugglers, under the umbrella of gur export are smuggling sugar to Afghanistan.

There is around Rs 25 per kg difference in price of sugar between the two countries, which is enticing the smugglers who carry on this malign and illegal activity to cash in on the price parity.



“Smuggling of sugar is going on for the last two months and around two million tones of sugar has been smuggled so far.”

Pakistan sugar mills would be producing around 3.2 million tonnes of sugar this year while 600,000 tonnes of sugar stocks would be carried forward. The total stocks in the country stand at 3.8 million tones, which is exactly equal to the demand. However, with the smuggling of two million tonnes, severe shortage of the commodity will hit the country.

Pakistan Sugar Mills Association (PSMA) of NWFP has also written a letter to Ministry of Commerce in September 2008 demanding ban on gur export immediately but nothing has been done so far. PSMA argued that if the gur export were not banned then it would create problem in catering the demand of sugar.

“It is high time to ban gur export otherwise it would be too late,” said Pakistan Sugar Mills Association Chairman, Iskander Khan. “The sugar mills are doing their best to meet the local demand but it is the middlemen who are exploiting the situation.” He said that the middlemen have bough sugarcane from the farmers at Rs 80 per maund and have created artificial shortage. These middlemen are forcing the mills to buy sugarcane at more than Rs 100 per maund. “These middlemen mint money on the expense of the farmers, millers and the common man, who is compelled to buy expensive sugar,” he lamented.

“High sugarcane prices and higher wages could push the sugar prices further,” Khan said.

The government has also increased the sales tax which would also take its toll on the end price for the consumer.

He said that the millers are getting only Rs 32.50 per kg while Rs 5 sales tax has pushed the sugar prices to Rs 37.50 in the wholesale market. The sugar is sold for Rs 40 to Rs 42 per kg.

If the government bans gur export, then the sugar industry can ensure Rs one billion tax from the Peshawar valley only. “One can only imagine the tax collection from the rest of the country,” he said.