ISLMABAD: Although a plan is ready to get green light from the Economic Coordination Committee (ECC) of the Federal Cabinet for import of 0.5 million ton sugar right in the middle of the crushing season 2021, but it may not get the purpose as imported commodity is going to be costlier than local production due to bullish trend in global market.
The global sugar market is hovering around $ 500 a ton and its import will cost (C&F Karachi port) Rs 95 a kg and after inclusion of transport cost, dealer/ sub dealer and retailer margin, will be available to the consumer at around Rs 105 a kg.
The import price may swing further up with the reports of import of commodity by Pakistan.
The globally sugar market is likely to remain blush due to less production worldwide this year. The main source of sugar to the global market like Brazil and Thailand are deficient in crop production this year due to some environmental issues and the same phenomenon is likely to continue for another sugar year (2021-22).
“Sugar import at this time is a bad decision and the Pakistan Tehreek- e- Insaf (PTI) government is going to repeat the last year blunder again without taking into account problems attached with ill-timed import of sugar”, a grower from Southern Punjab said while commenting on the government decision of importing the commodity.
He added the crushing season in Pakistan starts in November and ends up in end of March. The government departments get a clear picture of total local production at the end of the crushing season and a decision in between to import sugar is incomprehensible
The PTI government had created panic in sugar market last year by raiding at godowns and seizing the stocks of the businessmen in a bid to control the prices in the open market, but this strategy proved otherwise as it took the commodity rates all- time high.
Many in sugar sector believe it was the Punjab government, in particular, Aleem Khan, senior provincial minister, whose policy of seizing the stocks proved counterproductive and its worst victim were the end consumers who had to pay up to Rs 110 for one kg of sugar in 2021-20.
Instead taking some lesson from the last year debacle, the PTI government seems convinced to control sugar prices this year through ill-timed import. This strategy too can backfire.
A global sugar production report 2020-21 suggests India is the only country which is reporting comparatively better crop this year and it’s going to produce over 31.5 million tons of sugar in 2021. India’s better crop pattern is the only hope to ensure sugar supply to the global market, but one source (India) can not keep the prices at lower end in global market.
Pakistan sugar production in 2020 stood at 4.9 million tons and its demand was around 5.2 million tons. Its production may have better trend this year as crop’s per acre yield is showing healthy trend in first two months of the crushing season. At this stage when crushing season is exactly half way and no one has any idea of exact local production, the decision of import could harm all stakeholders of sugar sector, besides costing $ 250 million to the national exchequer.
Currently sugar is available in the local market at Rs 100 a kg and in case landing cost of imported commodity remains on higher side it can make locally produced sugar costlier also.
The import of sugar in the midst of crushing season can harm to the farmers who may not get current price as reports of import can slow down buying spree and end-up at reduction in the cane price. The government, instead spending hard -earned foreign exchange should give better opportunities to farmrrs to have good crop and earn more money. It should also stop painting sugar industry as a rogue industry and rather help it get better output by educating the farmers to have better varities of crop and not only meet local demand, but also earn foreign exchange for Pakistan by exporting aurplus sugar. If India can do it why not Pakistan?
The farmers are getting Rs 240 to 260 per maund and in some areas of southern Punjab even higher as the industry is eyeing upward trend in commodity prices in the coming months.
The industry may not maintain current momentum of buying of sugarcane if it fears some punitive measures from government or glut like situation in the market in the near future
