Sugar prices set to surge amid 1 million tonne shortage

Sugar prices in Pakistan are on the rise and could reach Rs200 per kilogram in the coming weeks due to a supply shortfall of nearly one million tonnes, as per reports. 

Currently, retail prices range between Rs165 and Rs170 per kg, marking a sharp increase from Rs140-150 per kg just a month ago. Wholesale rates in Lahore have climbed to Rs160 per kg, up from Rs145 per kg in wholesale markets.

The unprecedented price hike is attributed to excessive sugar exports over the past year, which totaled 700,000 tonnes. The current stock levels of 5.8 million tonnes might not be sufficient to meet domestic demand, especially as sugarcane recovery rates have fallen to 12% and cultivation area has declined by 20% this season. 

These factors have lowered production estimates, pushing market speculation that sugar prices could soon hit Rs200 per kg. While wholesale dealers currently lack stock, sugar mills still hold supplies.

Official estimates indicate Pakistan’s sugar production for the 2024-25 season will reach 6.8 million tonnes, a 3% increase from the previous year. However, with annual consumption estimated at 6.6 million tonnes, the surplus remains marginal. 

Industry experts caution that even minor disruptions such as hoarding or supply chain delays could lead to panic buying and further price hikes.

The situation is exacerbated by the approach of Ramazan, when sugar consumption spikes due to increased household demand for traditional sweets and beverages. In response, the government has allocated 100,000 tonnes of subsidised sugar for sale at Rs130 per kg through Ramazan bazaars nationwide. 

However, this allocation covers only 10% of the monthly demand during the holy month, leaving most families reliant on the open market, where prices remain high. Similar subsidy efforts last year failed to prevent a 25% surge in sugar prices during Ramazan.

On the other hand, the Pakistan Sugar Mills Association (PSMA) has rejected claims of abnormal price increases, stating that sugar prices fluctuate based on supply and demand.