Wholesale prices have surged, leading to a substantial increase in the retail price of sugar, which now ranges from Rs150 to Rs165 per kilogram. This price hike is attributed to unchecked hoarding and black marketing of the sweetener. Retailers are asking for Rs150 per kg, while many online grocery websites, marts, and superstores have marked the retail prices between Rs155 and Rs165 per kg. Rauf Ibrahim, Chairman of the Karachi Wholesalers Grocers Association, noted a Rs8 per kg increase in wholesale price over the past couple of days to Rs143 per kg, compared to Rs131-132 in the first week of July.
According to the Sensitive Price Indicator (SPI) data, the national average price has risen to Rs135-160 per kg in the last week, up from Rs125-140 per kg in the first week of July and a significant increase from Rs87-100 per kg in the first week of January 2023. Ibrahim argued that the government’s lack of control over soaring sugar prices and the absence of measures to curb black marketing and hoarding by market forces and sugar mills have allowed these entities to manipulate prices freely.
Government Actions and Sugar Sector Earnings
In response to the rising prices, the Punjab government took measures in the last week of July, which included confiscating hoarded sugar intended for black marketing. The government plans to sell the recovered sugar and contribute the proceeds to the national exchequer. It also intends to take legal action against sugar millers and market traders engaging in speculation while empowering the cane commissioner to regulate sugar rates, storage, transport, and distribution.
However, Ibrahim expressed skepticism over the practical effectiveness of these steps in reducing sugar rates, questioning the extent to which sugar stocks recovered from markets and sugar millers. Meanwhile, Sunny Kumar of Top Line Securities reported strong growth in the sugar sector’s profits, with earnings of the listed sugar sector increasing 23% year-on-year to a record high of Rs14 billion in the first nine months of FY23 (Oct-2022 to Jun-2023) due to rising sugar volumes and prices.
