The blame-game continues
17 February, 2006
By Zafar Iqbal Bhutta
This is for the first time in Pakistan`s history that sugar prices have increased by more than 95 per cent in the same financial year. The commodity, which was sold at Rs21 per kg at the start of the current financial year, is now available for Rs40 per kg and above.
The retail sugar prices set a new record of Rs42 per kg following reports of future sugar contracts in the market in anticipation of more supply shortages and rising international prices.
Pakistan Sugar Mills Association (PSMA) has criticized the government for accusing the sugar industry of increasing the rates. It said the industry had no control over free market mechanism and was fighting for its own economic survival.
Increase in sugar prices has perturbed the common man who believes that some government high-ups were fueling the crisis for vested interests, mainly financial concerns.
Sources said this latest price-hike had occurred despite the fact that about 700,000 tons of sugar was available with the Trading Corporation of Pakistan (TCP). But, top government functionaries-cum-profiteers had forced the corporation not to release the stock.
Federal Minister of Industries, Production and Special Initiatives Jahangir Khan Tareen, Pakistan Muslim League (PML) President Chaudhry Shujaat Hussain and Punjab Chief Minister Chaudhry Pervaiz Elahi are those figures in the government who own sugar mills.
Some sections of the society alleged that these people are directly involved in the latest increase in sugar prices and had forced the TCP not to release the sugar stock in time.
It is reported that President Gen Pervez Musharraf had taken notice of this artificial shortage and directed Prime Minister Shaukat Aziz to take steps to reduce the prices and double the supply of sugar to Utility Stores.
During a meeting with Prime Minister Shaukat Aziz and Adviser on Finance and Revenue Dr. Salman Shah, President Gen Pervez Musharraf failed to understand as to why sugar stock with the TCP had not been made available to the Utility Stores at a time when the country was experiencing shortage of the commodity.
The president also ordered strict action against those involved in the increase in sugar prices. But the question that arises is whether it is possible to take action against those high-ups who have sugar mills in the country? The answer perhaps is no.
This is for the first time in Pakistan`s history that sugar prices have increased by more than 95 per cent in the same financial year. The commodity, which was sold at Rs21 per kg at the start of the current financial year, is now available for Rs40 per kg and above.
The retail sugar prices set a new record of Rs42 per kg following reports of future sugar contracts in the market in anticipation of more supply shortages and rising international prices.
They said some investors were making advance payments for deliveries in July-August next year through ‘future contracts`.
Last weekend, Prime Minister Shaukat Aziz approved about 20 per cent increase in controlled sugar rate to Rs27.5 per kg at the Utility Stores Corporation (USC). Sugar is now available at Rs28 per kg at the stores.
President Musharraf should recall the era of President Ayub Khan who was forced to withdraw from his office because he failed to control sugar prices. A small increase in sugar rate brought an end to Gen Ayub`s rule in 1969. In our country different lobbies are at work that determine the prices of products in the country. Along with these big bosses, smugglers and hoarders also play their part in creating artificial shortage by smuggling a large quantity of sugar to Afghanistan.
In the NWFP, sugarcane growers produce Gur that they export to Afghanistan where it is used to make wine.
Industry sources said mill prices of the commodity ranged from Rs3,600 to Rs3,650 per 100kg, making wholesale prices touch Rs4,000 per 100kg and retail prices surge to Rs42 per kg and above.
During the last 15 days, the cost of a bag of sugar increased to Rs750 whereas the price of one kg sugar increased by Rs8.
The sugar crisis has been continuing unabated since the announcement of the federal budget 2005-06. So far, government`s efforts to resolve the dispute have remained unproductive. There are as many as 300 utility stores in the country and all have been receiving government`s supply of sugar. But certain ‘black sheep` in the corporation, in collaboration with local shopkeepers, are hampering the transfer of this facility to the common man. Instead of providing sugar to the consumers at low rates, these officials sell the commodity to the local shopkeepers.
Sugar prices in Pakistan have always been high compared to those in India. But, since January, prices have soared by Rs15 per kg that was unprecedented.
Some people were of the view that the government seemed not concern with public plight. They were also critical of the role of Monopoly Control Authority.
Retailers blamed the wholesale dealers for the recent increase, saying that they have been compelled to increase the price as they were buying the commodity at high rates from the wholesale market.
On the other hand, the wholesalers foresee further increase in the price because of the ongoing tussle between sugar mill owners and growers over the official rate of sugarcane.
Meanwhile, Pakistan Sugar Mills Association (PSMA) has criticized the government for accusing the sugar industry of increasing the rates. It said the industry had no control over free market mechanism and was fighting for its own economic survival.
The PSMA called for rationalization of sugarcane prices, the main component of sugar production, and said unless sugarcane rate was not stabilized the threat of price fluctuations would loom large.
Sugar industry is simply the processor of sugarcane whereas sales and retail prices have a set market channel that consists of dealers, wholesalers and retailers. The PSMA said it had nothing to do with the prices being highlighted by the authorities and media. The three-phased marketing elements and hefty sales tax add to the cost of sugar sales, the association said.
Talking to reporters, Federal Minister of Industries, Production and Special Initiatives Jahangir Khan Tareen said the increase in sugar price was a result of the international crisis in the sugar market coupled with increased cost of production at home.
He elaborated that sugar mills had purchased sugarcane at a price of Rs40 per 40kg last year but now the price had shot up to Rs70 per 40kg thus increasing the cost of production and thereby price of the commodity.
The minister commented that every country was prone to the effects of international market and the same was happening to Pakistan.
Mr. Tareen said sugar import from India by land route would reduce freight charges that "we have to pay if we import it through Karachi
Port". This would then have an impact on sugar prices, he added. End.
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