Pakistan government denies sugar price hikes as consumers complain of higher rates in Ramadan

A labourer carries a sack of sugar while loading on a cart at a wholesale food and grain market in Karachi, Pakistan on June 12, 2024. (REUTERS/File)

• Islamabad last week announced a fixed price of Rs164 per kg until April 15, but consumers say they have been paying as high as Rs180 per kg
• Analysts believe the current sugar price crisis stems from the government’s decision to allow export of 800,000 tons of sugar last year

ISLAMABAD: Pakistan’s National Food Security Minister Rana Tanveer Hussain on Monday dismissed reports of sugar price hikes in the country as consumers complained of higher rates of the commodity in Ramadan than the price fixed by the government.
Pakistan’s government capped the sugar price at Rs130 per kilogram, but market rates have remained above Rs180 per kg since January. Prime Minister Shehbaz Sharif this month formed a 10-member committee, led by Deputy PM Ishaq Dar, to negotiate price reduction with the Pakistan Sugar Mills Association (PSMA).
Last week, Dar announced a fixed retail price of Rs164 per kg until April 15, following talks with the PMSA. He also formed a sub-committee under Hussain to find a permanent solution to the issue and explore a possible two-tier pricing mechanism, ensuring that the public pays less while the industry pays more for sugar. The committee has been tasked with submitting its report by mid-April.
“The media is reporting that the price of sugar in the market is Rs180 ($0.64) per kilogram, which is not true as there is no such situation,” Hussain told reporters in Islamabad.
“Under no circumstances will the retail price be allowed to exceed Rs164 per kilogram and the ex-mill price will not go beyond Rs159 per kilogram.”
The PSMA has set up stalls across the country during the holy fasting month of Ramadan, where sugar is being sold at Rs130 per kilogram, according to the minister. It is available at Rs153 per kilogram at the government-run Utility Stores.
Hussain warned of strict action to ensure fair pricing of the commodity.
“The federal government, in cooperation with provincial authorities, will take firm action against anyone attempting to inflate sugar prices,” he said.
Sohail Shehzad, the secretary-general of the PSMA Punjab chapter, said the millers were providing sugar at the price fixed by the government, though issues might persist in areas where fresh supply had not yet arrived.
“As directed by the Government, the sugar industry is charging ex-mill prices as per the benchmark of Rs154 to Rs159,” he told Arab News.
“Retail rates have also come down to almost Rs164 with few exceptions of far-flung areas where fresh supplies on new rates have not yet reached.”
Arab News spoke with customers at various markets in the federal capital of Islamabad, who confirmed buying sugar at Rs180 per kilogram, Rs16 above the government price.
“I do not understand how the government claims the retail price of sugar is fixed at Rs164 per kilogram, when I am still buying it for Rs180,” Muhammad Javed, an electrician, told Arab News, holding a bag of groceries in his hands.
“No shop in my area is selling it at the official price and there is no proper enforcement.”
He lamented that the authorities announce price caps, but retailers keep charging whatever they want.
“If the government is serious about controlling prices, they need to ensure availability at the fixed rate, not just make statements,” Javed said.
Sumeera Ramzan, another consumer, said the government had made the price announcement and assumed the issue would be resolved, while sugar continued to be sold at Rs180 per kg in the market.
“As a housewife, managing the household budget is becoming increasingly difficult with these rising prices,” she told Arab News.
Shehbaz Rana, a journalist covering economic issues, said the crisis stemmed from the government’s decision to allow the export of 750,000 metric tons of sugar last year, along with nearly 50,000 metric tons sent to a Central Asian country under a government-to-government agreement.
“In total, around 800,000 metric tons of sugar were allowed for export and as a result, sugar mills profited from the international market, selling at higher prices,” he told Arab News.
Rana said the government lacks an effective mechanism to control market prices.
“Whenever price caps are imposed on any product or commodity, they often have counterproductive effects leading to increased hoarding and speculation,” he said, adding that the solution lied in holding sugar mills accountable, especially those that were allowed to export but were now failing to maintain agreed prices.
“The government should allow both imports and exports freely, letting market forces regulate the supply.”
But Food Security Minister Hussain said it was “completely incorrect” to suggest that sugar prices increased due to the government’s decision to allow exports last year.
“In 2023, Pakistan had a sugar stock of 7.6 million metric tons, while domestic consumption was only 6.3 million metric tons,” he said, adding that this left a surplus of approximately 1.5 million metric tons, of which only 700,000 metric tons were exported.
“This export earned Pakistan a valuable foreign exchange of $400 million.”
This year, Hussain said, sugarcane cultivation increased by 2 percent as compared to last year and initial projections indicated that sugar production would be higher, however, sugarcane yields remained lower than expected due to the impact of climate change and as a result, sugar production stood at 6 million metric tons this year.
“However, with a carryover stock of around 500,000 metric tons from last year, the total available stock is 6.5 million metric tons — still more than the country’s consumption needs,” he said, reiterating there was no sugar shortage and rather, the country had a surplus.
“We will not tolerate this misinformation campaign as there is no pressure on the sugar market, nor are prices as high as some claim,” he said, adding that the government was committed to ensuring price stability and preventing any artificial inflation.