The Punjab government has taken decisive action to address the issue of rising sugar prices and illicit trade practices within the sugar industry. In a notification issued on July 31, 2023, the provincial cane commissioner outlined a strategy to regulate sugar prices and begin the retrieval of sugar stocks from mills within a strict three-day period. This move comes as sugar prices have escalated significantly from Rs. 100 per kg in April 2023 to a staggering Rs. 155 per kg by the last week of July 2023.
The primary objective of this government initiative is to promptly retrieve sugar stocks from mills, with deputy commissioners of respective districts overseeing the process. Currently, an estimated 0.2 million tonnes of sugar are stored in the warehouses of approximately twelve mills. However, the cane commissioner has made it clear that sugar mills are not permitted to hold onto sold sugar for more than 15 days.
The aim of reintroducing confiscated sugar into the market is to stabilize prices and thwart unjust price manipulation by sugar mills. These mills have been exploiting the situation by increasing prices from Rs. 100 per kg to Rs. 150 per kg, pocketing undue profits of a staggering Rs. 25 billion in just three months.
Upon investigation, the cane commissioner attributed the surge in sugar prices primarily to hoarding and speculation within the sugar business. It was revealed that despite sugar being sold, it was not lifted by dealers and occupiers of sugar factories, allowing the stocks to be stored in warehouses. This practice of trading sold but unlifted stocks artificially inflated sugar prices, placing an unjust burden on the public.
To tackle this issue head-on, the cane commissioner issued an order requiring buyers who purchased sugar more than 15 days before the order’s issuance to retrieve their sugar from sugar mill warehouses within three days. Furthermore, occupiers of sugar factories are strictly prohibited from keeping sugar beyond this designated period. Additionally, they must report futures contracts for sugar to the deputy commissioner of the respective district and refrain from storing sugar bought through futures contracts for more than 15 days in factory warehouses.
This order is immediately effective and will remain in place until November 30, 2023.
