Pakistan’s prime minister also orders a ban on sugar exports as prices of commodity continue to soar in domestic market
Prime Minister Imran Khan on Friday approved a summary to stop the export of 350,000 tons of sugar, while allowing the import of 300,000 tons of sugar through the private sector in a bid to curtail price hikes in the domestic market. This would be the first time Pakistan has had to import sugar to meet local demands in 8 years.
The Economic Coordination Committee, whose approval will lead to its implementation, would now take up the summary. After the ECC approves it, the summary would receive final approval from the federal cabinet.
The prime minister’s decision comes months after the country exported 141,447 metric tons of sugar, according to the Pakistan Bureau of Statistics. In the summary he has approved, the premier has directed that no taxes or duties would be applied to the import of sugar through the private sector. None of the importers would be provided any financial support from the federal or provincial governments.
Sugar prices, on a similar trajectory as wheat, started to rise last year to little action from the incumbent government. Much like the wheat crisis, the rampant price hikes have finally forced the Pakistan Tehreek-e-Insaf-led government’s hand to act against what P.M. Khan has repeatedly described as “mafias” trying to profit off a basic commodity.
According to daily Dawn, the average retail price sugar per kilogram was Rs. 53.75 in 2017-18; Rs. 61.43 in 2016-17; Rs. 64.03 in 2015-16; and Rs. 58.91 in 2014-15. The annual domestic consumption ranges from 5.1 million tones to 6 tons, and a single rupee increase to its per kg price can result in a net profit of Rs. 5.1 billion from consumers.
The Sugar Advisory Board recently declared that Pakistan currently had a stock of 1.72 million tons of sugar. This availability, however, does not appear to have had any impact on sugar prices, with the wholesale rate rising from Rs. 64 to Rs. 74/kg in the last month alone. This price hike is unlikely to come down even with the decision to import sugar.
In the last three weeks, sugar price in the international market has reached $418 per ton. This would roughly translate to sugar costing Rs. 85/kg when it arrives at Karachi, with transportation to the rest of the country adding to that price. Another factor for the price may well be the government’s decision in the last budget to increase sales tax on domestic sugar from eight percent to 17 percent. A reduction to this tax has not been considered as yet.