Govt caps retail sugar price at Rs164 per kg

ISLAMABAD: The government and the sugar sector reached an agreement on Wednesday, setting the ex-mill and retail prices of sugar at Rs154-159 and Rs164 per kg, respectively, for one month. However, at 274 fair-price shops nationwide, sugar will be available at a subsidized rate of Rs130 per kg. Deputy Prime Minister Ishaq Dar announced the decision after discussions with the Pakistan Sugar Mills Association (PSMA).

The agreement was finalized during the annual general meeting (AGM) of the sugar sector on Tuesday, where the retail price was fixed at Rs164 per kg and the ex-mill price was set within the Rs154-159 per kg range.

Previously, the government had rejected the PSMA’s demand to fix the ex-mill price at Rs175 per kg, warning that any attempts to manipulate the market would be met with strict action. The sugar industry had initially planned to raise prices to Rs200-220 per kg. However, government estimates determined that the actual cost of production, including sales tax, was below Rs154 per kg.

Sugar millers, on the other hand, argued that their production costs exceeded Rs175-180 per kg. The average cost of sugarcane in the current season stood at Rs450 per 40 kg (maund), translating to Rs1,125-1,150 per 100 kg. Factoring in other manufacturing expenses, the total cost of sugar production per 100 kg reached Rs1,185. With an estimated recovery ratio of 9-10 percent, the production cost per kilogram of sugar ranged between Rs118-120. Even after accounting for administrative costs and profits, the final cost was calculated at Rs130 per kg. With an 18 percent GST imposed, the ex-mill price amounted to Rs154 per kg.

Deputy PM Dar emphasized that selling sugar at Rs178-180 per kg was unacceptable and not tolerable to the prime minister.

A sub-committee, led by Minister for National Food Security and Research Rana Tanveer Hussain, will submit its recommendations before April 19. Dar stated that the sugar millers had presented their justifications during extensive discussions, and the government remained committed to ensuring sugar remains available at reasonable prices.

He further noted that through collective consultations, if a two-tier pricing system is implemented, consumers could benefit from even lower sugar prices. He also expressed gratitude to the sugar millers for agreeing to provide sugar at the subsidized rate of Rs130 per kg at all 274 Sasta Bazaars.