Sugar retailers minting money despite ex-mill rate down

LAHORE - The retailers are not ready to pass on the benefit of low sugar rates to the consumers, as the price of sweetener has plummeted to Rs54 per kg in the wholesale market. Consumers, particularly in the posh areas, are forced to pay Rs70 to Rs72 per kg to the shopkeepers, as they are totally ignorant of the fact that the ex-mill rate of the sugar has now go down as low as Rs52 per kg. While the superstores in the provincial capital are also charging the consumers at their own will of up to Rs75 per kg and there is no government department or agency to check this act of unbridled profiteering. The government has left the public on the mercy of the powerful sugar wholesale dealers and stockists because in spite of a significant cut in the sugar prices by the millers, the sugar prices are still very high in the open market as compared to the ex-mill rate. According to the market sources, the commodity price is around Rs68-75 per kg in grocery shops of different areas of the city, indicating that the shopkeepers are earning the profit of Rs15 to Rs18 per kg while the government remains silent spectator in this episode. After the continuous fall, the wholesale sugar price remained fixed at Rs53 per kg for the last one month but the retailers in major markets are still charging up to Rs70 per kg. Presently, there is a huge difference of Rs18 per kg between retail and ex-mill rate of sugar which is totally unjustified. Retailers said that the high transportation price have pushed up the cost and they are not keeping very high margin. According to market sources, after touching a peak of Rs78 per kilo, the retail price of sugar should be reduced due to decrease in ex-mill rate. They said that the retail price of sugar went up to Rs78 in the beginning of Ramzan due to boost in demand and worsening law and order. Now a 100kg sugar bag price has declined by Rs500 in the wholesale market, but there is no downfall was seen in the open market at retail level. The shopkeepers blamed the wholesale dealers and stockists for keeping the rate of sugar high, saying all margin goes to them. However, they admitted that some retailers have failed to pass on the benefit of plunging rates of the sweetener. They argued that the shopkeepers have to take at least one week to fully implement the price reduction in the wholesale market. As per market sources, the ongoing sugarcane crushing season, which is continuing at a brisk pace, has largely helped alleviate financial woes of the poor segment of the population who can now afford to purchase the commodity as per desire. Talking to The Nation, Pakistan Sugar Mills Association central chairman Javed Kiyani attributed the decline in sugar prices to start of the crushing season, which forced the wholesalers and stockists to release their stock into the market. He said the price of refined sugar had come down by 25 per cent this year in Nov against the corresponding month of last year, as the millers produced refined sugar in excess of the requirement. He said that the sugar price was Rs80-90 per kg in Nov 2010 and Rs55-60 this year. He did not rule out any further price cut in one of the most demanding commodities of every household in the coming days as dealers are expected to bring further stocks into the market over fear of arrival of fresh stocks into the market by the sugar mills. In response to a question, he said that the country had a carryover stock of sugar of 0.6 million tons in Oct against the total domestic consumption of 4.2 million tons. He said that we have around 0.8 million tons of sugar surplus in the next season. Javed Kiyani urged the government to timely purchase the 0.2 million stock of sugarcane to ensure payments to the growers. If the government does not want to buy sugar from the industry, it should be allowed to export which is their legitimate right without which the growers would be deprived of their payments, stated Mr Kiyani. Presently the sugar mills owed Rs25-30 billion to the banks, besides they have to pay around Rs225 billion to the farmers while next year sugarcane crop of around 60 million tons also awaiting. So the government should evolve a mechanism to timely purchase the sugar from the millers to ensure the in-time payment of Rs225 billion to the farmers, which is now on stake only due to the government.