Sugar Prices in Pakistan Expected to Surge to Rs200/kg
Introduction
Pakistan is on the brink of a significant sugar price hike, with rates potentially reaching Rs200 per kilogram in the coming weeks. The primary factors driving this surge include excessive sugar exports, a decline in sugarcane yield, and rising production costs. Currently, sugar prices in retail markets range between Rs165 and Rs170 per kg, marking a sharp increase from Rs140-150 per kg just a month ago. Experts believe that the crisis could worsen, particularly with Ramazan approaching, when sugar consumption spikes.
Current Sugar Market Scenario
Wholesale and Retail Prices on the Rise
As of this week, the wholesale sugar price in Lahore stands at Rs159 per kg, while retailers are selling it between Rs165 and Rs170 per kg. The upward trend has been persistent, with prices jumping significantly over the last few weeks.
Declining Sugarcane Yield
The President of the Kiryana Merchants Association, Hafiz Arif, attributes the crisis to multiple factors, including a drastic reduction in sugarcane yield and excessive exports. Sugarcane recovery rates have fallen to nearly 12%, and the cultivation area has decreased by 20% this season, further exacerbating the supply crunch.
Factors Driving the Sugar Price Surge
1. Excessive Sugar Exports
One of the main reasons for the current shortage is the export of 700,000 tonnes of sugar over the past year. While exports bring in foreign exchange, they have also depleted local reserves, pushing prices higher.
2. Reduced Sugarcane Production
The decrease in sugarcane yield has contributed to limited sugar supply. Official data indicate that Pakistan’s sugar production for 2024-25 is estimated at 6.8 million tonnes, only slightly higher than the previous year. With annual consumption at 6.6 million tonnes, the margin for surplus remains minimal.
3. Hoarding and Supply Chain Disruptions
Experts warn that minor disruptions such as hoarding and supply chain delays can lead to panic buying, further aggravating the crisis. Traders and middlemen may exploit the situation, driving up retail prices beyond reasonable limits.
4. Impact of Ramazan on Sugar Demand
Sugar demand typically surges during Ramazan as households prepare sweets, beverages, and desserts for iftar and sehri. This seasonal spike in demand will likely push prices higher unless immediate interventions are made.
Government Measures and Industry Response
Subsidised Sugar Sales Initiative
To counteract the price hike, the government has allocated 100,000 tonnes of sugar for subsidised sales at Rs130 per kg through Ramazan bazaars. However, critics argue that this initiative is insufficient. Economist Osama Siddiqi stated that subsidised sugar accounts for only 10% of monthly demand during Ramazan, leaving most consumers reliant on market rates.
Pakistan Sugar Mills Association’s Response
A spokesperson for the Pakistan Sugar Mills Association (PSMA) rejected claims of abnormal price increases, attributing the rise to supply and demand fluctuations. The PSMA argues that market forces determine sugar prices and that hoarders and profiteers are the primary culprits behind the artificial price surge.
Sugarcane Price Hike and Production Costs
Sugarcane prices have risen to Rs650 per maund this season, further increasing sugar production costs. Additional factors such as higher taxation on the sugar industry, costly imported chemicals, and rising labor wages are contributing to the escalating prices.
Climate Change and Pest Attacks: Impact on Sugarcane Yield
Global Warming and Extreme Weather Conditions
Climate change has played a significant role in damaging Pakistan’s sugarcane crops. Last summer, extreme heatwaves caused substantial losses in yield. Additionally, heavy rains in September and October hindered fertilisation efforts, further reducing production.
Pest Attacks on Crops
Sugarcane farmers have also reported increased pest infestations, leading to lower crop yields. Without effective pest control strategies, the industry could face ongoing production challenges in the coming years.
Future Outlook and Possible Solutions
1. Stricter Export Controls
The government may need to impose stricter export restrictions to ensure that domestic demand is met before sugar is sent abroad. This could help stabilise prices and prevent future shortages.
2. Crackdown on Hoarding and Black Marketing
Authorities must take strict action against hoarders and profiteers who artificially manipulate sugar prices. Regular market inspections and penalties for unethical trading practices could help curb the crisis.
3. Investment in Sugarcane Farming
Encouraging farmers to expand sugarcane cultivation and invest in better agricultural practices could improve yields and ensure a steady supply of sugar in the long run.
4. Transparent Pricing Mechanism
Introducing a transparent pricing mechanism that balances the interests of both consumers and producers could help stabilise the sugar market and prevent extreme price fluctuations.
Conclusion
The surge in sugar prices in Pakistan is a multifaceted issue, driven by excessive exports, declining sugarcane yield, supply chain disruptions, and increased production costs. While the government has introduced subsidised sugar sales to ease the burden on consumers, these measures may not be sufficient to prevent a major crisis during Ramazan. Stricter regulations, better agricultural policies, and a crackdown on market manipulation are necessary to stabilise sugar prices and ensure affordability for all.
Frequently Asked Questions (FAQs)
1. Why are sugar prices increasing in Pakistan?
Sugar prices are rising due to excessive exports, reduced sugarcane yield, hoarding, and increased production costs.
2. How much will sugar cost during Ramazan?
Experts predict that sugar prices could reach Rs200 per kg in the coming weeks due to high demand and limited supply.
3. Is the government providing subsidised sugar?
Yes, the government has allocated 100,000 tonnes of sugar for subsidised sales at Rs130 per kg through Ramazan bazaars.
4. What factors are affecting sugarcane production?
Climate change, extreme weather, pest attacks, and rising fertiliser costs are major factors impacting sugarcane production.
5. How can the sugar crisis be controlled?
Possible solutions include restricting exports, cracking down on hoarding, increasing sugarcane farming, and implementing a transparent pricing mechanism.
