Sugar Price Increase Not Due to Exports: PSMA Punjab

The Pakistan Sugar Mills Association (PSMA) – Punjab Zone has refuted claims that the recent increase in sugar prices is a result of sugar exports. In a statement, a spokesperson for the association dismissed the allegations as misconceptions, asserting that the price hike has been inaccurately linked to exports without considering the underlying facts. The spokesperson explained that the sugar industry faced significant liquidity challenges due to delays in receiving export permissions. By the end of September 2024, the industry had accumulated a surplus of approximately 1.5 million metric tons of sugar, valued at Rs. 250 billion. This surplus, pledged with banks at an interest rate of nearly 25%, represented two years of excess production. The spokesperson also highlighted that sugar has a storage life of only two years, after which it becomes unfit for human consumption. The PSMA representative emphasized that an agreement with the government, established during the first export permission, ensured that ex-mill sugar prices would not exceed Rs140 per kilogram during the export period. Despite this, the spokesperson noted that due to the large surplus, ex-mill prices remained well below the agreed benchmark for several months. Nearly 50% of the available sugar was sold at prices below the cost of production, resulting in significant losses for the industry. The spokesperson further explained that the current sugarcane crushing season has been marked by challenges, including a decline in sucrose content and overall crop yield. These issues were attributed to pest attacks, adverse weather conditions, and the broader impacts of global warming. Additionally, the cost of sugarcane has risen sharply, with growers receiving Rs. 650 per maund, further increasing production costs for millers.