Sugar prices climb ahead of Ramzan

Islamabad and the Pakistan Sugar Mills Association (PSMA) recently collaborated to reduce the price of sugar to 130 rupees across Pakistan for the holy month of Ramzan. However, with the sacred month looming, wholesale prices continue to rise uncontrollably.

As per credible reports, sellers in Karachi are charging an extortionate 160 rupees per kg for the sweetener. Moreover, retailers claim it might not be possible to sustain frequent rises in sugar rates since the price of a 50kg bag of sugar has skyrocketed by up to 200 rupees per bag in just a few days.

Chairman of the Karachi Wholesalers Grocers Association (KWGA), Rauf Ibrahim, announced that the wholesale rate of sugar per kg has increased by approximately 13 rupees within four days. According to Rauf Ibrahim, opportunists are attempting to rake in large profits during Ramzan, when sugar demand doubles from 550,000 tons to about 1.1 million tons.

Reports claim that sugar prices could creep up to 200 rupees during Ramzan if government officials turn a blind eye to the issue. Stakeholders have called upon federal and municipal authorities to take notice and expand the scope of the crackdown against individuals hoarding sugar.

Recently, the sugar industry pledged to aid federal and municipal authorities in ensuring economical sugar prices for the public during the holy month of Ramadan. According to a spokesperson from PSMA, sugar prices are determined by market forces such as supply and demand. However, a handful of speculators spread false information to distort the market and artificially inflate prices for personal monetary gain.

If authorities can discourage the hoarding of sugar, prices might not surge as high as analysts claim they will. This can be done by enacting an action plan under which the government will collect production and sales data from sugar millers.

Hoarding causes financial harm to consumers, farmers and the wider economy. In many cases, sugar is not a final good, as other industries use the commodity as an input in their production processes. The confectionery industry can serve as an example of this phenomenon, and it faces rising input costs when sugar suppliers manipulate the prices, causing profit margins to drop considerably.

Reports reveal that authorities captured 550,000 kg of sugar in a raid in Bhens Colony. Speaking to relevant stakeholders, Rauf Ibrahim implored authorities to survey the depots of millers to ensure they are not partaking in hoarding sugar.

According to data from the Sensitive Price Index (SPI), sugar prices have climbed from 145-160 rupees per kg to 150-165 rupees in approximately one month. For reference, sugar rates sat at a conservative 130-150 rupees in early January.