Last update: Tue, 17 Jan 2017 03pm
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Delayed sugar imports pinching consumers

A national love for sugary delights makes Pakistan one of the largest consumers in the continent. But for some consumers a misery has struck in recent months, as sugar prices have sky rocketed, where and when its available.

The democratically elected government had promised the availability of cheap sugar to the people. That promise has hit a road block with Sadan General Trading (SGT) defaulting on its bid to deliver 50,000 MT of sugar.

Thankfully, recent weeks have witnessed prices receding below the highs of Rs70/kg. According to the retailers association, a kilogram of sugar was available in the open market for Rs60.

However, this number could fall down by as much as 25 percent to Rs45 when the imported sugar is unloaded in domestic markets. Globally, sugar prices have fallen from the high of $767/ton to an average of $424/ton, according to data released by the World Bank.

Now, whats causing the delay in the import of sugar?

Apparently, SGT technically made the lowest bid on the tender. They were betting on falling international prices and hoping to acquire sugar from Brazil. Prices surely fell, but sugar supplies from Brazil follow a somewhat different harvesting pattern from Pakistan. Crushing season is still underway and the required sugar won be available until the first week of May.

Chairman TCP, Anjum Bashir acted in the interest of the country by not allowing extensions in the delivery agreements. As a result of SGTs default, Pakistan will be able to enjoy lower international prices.

But, delaying the import of sugar any further will cause the thinly stretched households budgets to be squeezed further.

BR Research estimates suggest that if sugar prices in Pakistan were to track international prices, a kilogram would cost anywhere between Rs35 to Rs40, after adjusting freight and delivery costs.

Not more than a fortnight before the delay, the PSMA urged the government to impose a 35 percent duty on imported sugar. Though, millers claimed profitability concerns in case the duty wasn imposed, the ECC didn act on that request.

As it turns out, the default of SGT causing a delay in the import of sugar has managed to achieve the aims of the millers. Whether or not, there is a connection is anybodys guess. What remains to be seen is how soon TCP can import sugar into the country and provide relief to the average consumer.