KARACHI: The looming sugar crisis is going to worsen in the coming few months as the sugar barons have warned the government that the landed cost of imported sugar will cross Rs 75 per kilogramme in view of the existing prices of sweetener touching $800 per tonne in the international market.

There is no other solution but the government will be forced to import one million tonnes of sugar in order to meet the expected shortfall of the current season.

Former president Pakistan Sugar Mills Association Sindh and Managing Director Al-Abbas Group and Member Executive Committee, Pakistan Sugar Mills Association (PSMA) Shunaid Qureshi stated this at a two-day ‘National Conference on Competition Regime in Pakistan’, organised by the Competition Commission of Pakistan (CCP) here on Monday.

He said, “We have a shortage of one million tonnes of sugar, which has to be generated from any source. The international prices of sugar are at the highest and the importers are reluctant to purchase sugar at a higher price. The imported price of sugar may touch around Rs 75 per kg, which would be sold in the market at a higher price. The importers are scared to purchase imported sugar at a price of Rs 75 per kg. This is a serious problem, which we are going to face and the government must take some steps to overcome this shortage. We have more serious issues of increased prices of other essential commodities like ghee, wheat etc, but everyone is only talking about sugar prices,” he added. He requested the CCP to pursue the government for abolishing outdated laws including Sugar Factories Control Act, 1950 to ensure fair competition in the sugar industry.

Sharing serious problems about the sugar sector, he said that sugar industry is a highly regulated sector. The sugar manufacturing industry has historically been and continues to be heavily and comprehensively regulated by the federal government as well as the concerned provincial governments. These outdated laws include Sugar Factories Control Rules, 1950, Sugarcane Act, 1934 and Industries (Control on Establishment and Enlargement) Ordinance, 1963. The commission should work with the government in abolishing the parts of the acts that are outdated and out of sync with free market economy and Competition Commission Ordinance of 2009.

When the ‘Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance’ (MRTPO) 1970 was abolished, the CCP took the plea to introduce a law for promoting fair and free competition in the market in view of global international practices. On the other hand, sugar industry is still being regulated by such old laws, which force buying sugarcane at a fixed price under the said act of the parliament. Both the low and high quality sugarcane has to be purchased at the same price. Even we are not allowed to operate mills at our own decisions. The CCP talks about the free competition for which these old regulations must be replaced with the new laws.

He stated that it is a misconception among the general public about the so-called huge profits being made by the sugar mills. The factual status is that the sugar industry has no control on raw material price. This is evident from the fact that sugar cane (raw material) prices are notified by the provincial govt. Sugarcane accounts for 70 to 80 percent of the total cost of sugar and there is no room for the industry to influence or effect competition.

He was of the view that the industry has no control on quality of sugarcane. The sugarcane price is based by the weight and not by the quality (sucrose content). In almost all the countries around the world the price of sugarcane is determined according to the sucrose content.

The representative of the Trading Corporation of Pakistan informed the participants that the TCP has not been involved in any kind of hoarding. It only follows the directives of the Economic Coordination Committee (ECC) of the Cabinet regarding sugar issues. The TCP handles imports and exports of the essential commodities.

source: dailytimes

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