Pakistan : PSMA claims high sugar prices not due to exports
The Pakistan Sugar Mills Association (Punjab Zone) denied that sugar exports caused price hikes, stating that delayed export approvals led to liquidity issues. Surplus stocks of 1.5 million metric tons were pledged with banks, while sugarcane rates rose to Rs650 per maund due to lower yields. The industry faces losses from selling sugar below production costs.
ISLAMABAD – Pakistan Sugar Mills Association (Punjab Zone) spokesman has said that sugar prices have not increased due to exports. In a statement, he said that some unfounded misconceptions have been raised in media by linking sugar price hikes with sugar exports without establishing factual factors.
He explained that due to a conservative approach, sugar industry was not timely allowed export permission which caused serious liquidity issues for the industry. At the end of September 2024, industry had two years of surplus sugar production in pipeline (approximately 1.5 million metric tons valuing Rs. 250 billion) which was pledged with banks at nearly 25 percent interest rate. Notwithstanding the fact that storage life of sugar is only two years, after that it becomes unfit for human consumption. It is an international practice that whenever local production of a food commodity becomes surplus, it is exported. It was mutually agreed with the government since the time of first export permission that sugar prices will not exceed Rs140 ex-mill per kg during export period but due to huge surplus stocks, the ex-mill prices remained much below this benchmark continuously for many months. Almost 50 percent of total available sugar was sold much below its cost of production causing massive losses to the industry. Continuous production of surplus sugar every year without its exports and domestic sale of sugar below its cost of production caused huge losses to the industry.
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Since start of current crushing season in Pakistan, it became evident that sucrose content and overall yield of sugarcane crop has dropped significantly due to pest attacks, inclement weather and effects of global warming. India is also facing a decline in yield and recovery of sucrose content in sugarcane crop. He further said that in the current crushing season rates of sugarcane have risen considerably and growers have received historically high rates of sugarcane at Rs650 per maund which provided them and agriculture sector sustainability and prospects of better sugarcane crops in coming years.
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Source : The Nation
