Islamabad: Prime Minister Shehbaz Sharif has taken a decisive step to address the rising cost of sugar in Pakistan by forming a high-level committee under the leadership of Ishaq Dar. The committee’s primary objective is to engage in discussions with sugar mill owners and explore measures to bring down the soaring sugar prices that have placed an additional financial burden on consumers across the country.
Sharp Increase in Sugar Prices After Export Decision
The recent decision to allow sugar exports has led to a significant price hike in the domestic market. Since the implementation of this decision, sugar prices have surged by 19%, pushing the cost per kilogram to Rs 180.
According to the Ministry of National Food Security, every rupee increase in sugar prices collectively extracts an additional Rs 2.8 billion from consumers’ pockets. This has prompted immediate intervention from the government to curb further inflation and stabilize the market.
Formation of a High-Level Committee to Address the Crisis
In response to the escalating prices, the Prime Minister’s Office, in collaboration with the Pakistan Sugar Mills Association (PSMA), has established a 10-member committee dedicated to addressing this issue. The committee has been tasked with negotiating the reduction of the ex-mill price of sugar and ensuring affordability for the general public.
The committee members include federal ministers Rana Tanveer, Azam Nazir Tarar, Dr. Tauqir Shah, and Tariq Bajwa, along with four representatives from the PSMA. The Secretary of the Ministry of Industries and Production will provide essential administrative support for the committee’s operations.
Exclusion of Key Government Official from the Committee
Notably, the Prime Minister’s Special Assistant on Industries, Haroon Akhtar Khan, was not included in the committee. This omission has raised questions within government circles, given his crucial role in the industry’s regulatory framework.
The committee has been directed to submit its findings and recommendations within three days, underscoring the urgency of the matter.
First Meeting and Initial Discussions
The first meeting of the committee was held yesterday, during which government officials engaged with sugar mill owners to deliberate on potential pricing adjustments. During the discussions, government representatives pointed out that the average production cost of sugar stands at Rs 153 per kilogram. They urged the sugar mills to voluntarily lower their prices to reflect this cost.
However, sugar mill owners have requested additional time to consult with all stakeholders before finalizing any pricing decisions.
The Impact of Rising Sugar Prices on the Economy
The Federal Bureau of Statistics has reported an alarming increase in sugar prices, with a surge of Rs 10 per kilogram within a single week and an overall increase of Rs 27 compared to the previous year. This steep rise in prices has significantly impacted household budgets, particularly during a time when inflation is already a pressing issue in Pakistan.
An official from the Ministry of National Food Security, highlighted the massive financial gains sugar mill owners have reaped due to price hikes.
- An increase of just Rs 1 per kilogram has translated into a collective benefit of Rs 2.8 billion for sugar mill owners.
- Over the past week alone, sugar mills have earned an additional Rs 26 billion due to price escalations.
- Since the start of the crushing season, mill owners have amassed a staggering Rs 76 billion in extra profits.
Role of Sugar Exports in Price Surge
One of the primary contributors to the sharp rise in sugar prices has been the government’s decision to allow large-scale sugar exports. According to the Federal Bureau of Statistics, 757,779 metric tons of sugar were exported between July and February of this fiscal year.
This marks an astonishing 2,190% increase in sugar exports compared to the previous year, during which only 33,101 metric tons were exported. As a result, sugar exporters have earned $407 million during this period, adding to the domestic supply constraints and driving up local prices.
Industry Perspective on Rising Prices
While the government attributes the price hike to excessive exports, industry representatives offer a different perspective. Sikandar Khan, President of the PSMA Khyber Pakhtunkhwa Chapter, stated that the primary reason for the increase in sugar prices has been the rising cost of sugarcane during the crushing season.
He explained that sugarcane prices have surged due to higher demand and logistical challenges, which in turn has directly affected the cost of sugar production. Khan emphasized that without addressing these fundamental issues, merely reducing ex-mill sugar prices may not provide a sustainable solution.
Government’s Next Steps
In light of these developments, the government is expected to take the following actions:
- Intensify negotiations with sugar mill owners to reach an agreement on reducing sugar prices without disrupting industry operations.
- Review the sugar export policy to strike a balance between earning foreign exchange and maintaining a stable domestic supply.
- Monitor the sugar supply chain to prevent hoarding and artificial inflation of prices by wholesalers and distributors.
- Introduce consumer relief measures to counteract the financial strain caused by high sugar prices.
Conclusion
The rising sugar prices in Pakistan have sparked widespread concern among both consumers and policymakers. The Prime Minister’s formation of a high-level committee signifies the government’s commitment to addressing this issue promptly. However, with conflicting interests at play—balancing exports, production costs, and consumer affordability—the path to a resolution remains complex.
As discussions progress, all eyes will be on the government’s ability to navigate these challenges effectively and ensure that essential commodities like sugar remain accessible to the common citizen. The outcome of this initiative will not only impact household budgets but also serve as a critical test of the government’s economic management capabilities.
