The retail price of sugar has experienced a significant surge, reaching Rs. 150-165 per kilogram, primarily driven by a rise in wholesale prices. The situation has prompted retailers to demand Rs. 150 per kg, while online grocery websites, marts, and superstores have set retail prices at Rs. 155-165 per kg. The sugar sector, on the other hand, has been witnessing robust growth, leading to record-high earnings.
Price Hike and Spiraling Effects
Data from the Sensitive Price Indicator (SPI) reveals a notable increase in the national average price for sugar in the country. In the last week, sugar prices ranged between Rs. 135-160 per kg, compared to Rs. 125-140 per kg in the first week of July and Rs. 87-100 per kg in January 2023.
Wholesalers and Government Intervention
Rauf Ibrahim, Chairman of Karachi Wholesalers Grocers Association, highlights that the wholesale price of sugar has risen significantly in the last 1-2 days, reaching Rs. 143 per kg, compared to Rs. 131-132 in the first week of July. Concerns are raised over the government’s lack of action in curbing the surge, leading sugar mills to raise prices independently.
In response, the Punjab government has taken certain measures, including confiscating stockpiled sugar for black marketing purposes. The recovered sugar will be sold by the government, and the funds will be directed to the national exchequer. Additionally, the government plans to file cases against sugar millers and market traders for speculation and has granted the cane commissioner authority to regulate the storage, transport, and distribution of sugar and fix rates.
Mixed Reactions to Government Actions
Despite the government’s intervention, Rauf Ibrahim expresses dissatisfaction with the overall response of federal and provincial governments to address the issue effectively. The extent of recovered sugar stocks from markets and sugar mills remains uncertain.
Sugar Sector’s Profits Reach New Heights
Sunny Kumar of Topline Securities reports that the sugar sector is experiencing strong growth in profits after several years. Listed sugar sector earnings have risen by 23% year-on-year, reaching a record high of Rs. 14 billion in the first nine months of FY23 (Oct-2022 to Jun-2023) due to increased sugar volumes and prices.
Export Opportunities Boost Earnings
The sugar sector’s net sales have witnessed a 25% YoY increase, amounting to Rs. 235 billion in 9MFY23, primarily due to the export of 216,000 tons of sugar from February to June 2023, fetching $104 million. The government had permitted the export of 250,000 tonnes of sugar from January 2023 to June 2023. International sugar prices have also seen a 31 percent rise, increasing from $17.42 cts/Ib in October 2022 to $22.89 cts/Ib in June 2023 and currently standing at $24.37 cts/Ib.
