USC wants 200,000 tons of sugar amid declining demand
KARACHI: Utility Stores Corporation (USC) scrambling to lift 200,000 tons of sugar from factories and open markets – nearly 10 times the supply last month – as consumers thronged the state-owned chain store to buy subsidized sweeteners amid rising prices, it was studied on Wednesday.
Officials said USC wanted to get 200,000 tons of white refined sugar from factories and open markets as a real difference in sugar prices from the retail market and inadequate supplies extended queues at stores across the country before Ramazan. USC has invited offers to supply 200,000 tons of white refined sugar to be sent to zone offices in all provinces. USC Managing Director Omar Lodhi said utility shops sell sugar at Rs67 per kilogram compared to Rs80 per kg on the open market.
“Because there is a significant difference between the prices of different goods on the open market and in utility shops, the number of customers in the latter has greatly increased,” Lodhi said in a statement. The government has allocated Rs50 billion for utility shops and the Ministry of Finance has issued Rs21 billion of the total allocation
An official said demand for all commodities including sugar surged abnormally due to the lockdown triggered by the corona virus. “Requests will double because Ramazan is near,” the official said. Sugar consumption increased significantly in Ramazan, while market observers predicted a further rise in retail prices. Lahore and Rawalpindi will receive 14,000 tons each of the 200,000 tons of sugar to be purchased. Peshawar will get 11,533 tons. Around 8,000 tons will be sent to Karachi and Islamabad respectively, while the rest will be sent to other USC zone offices in the country. Last month, Utility Stores Corporation bought 20,000 tons of sugar.
The Pakistan Sugar Manufacturers Association (PSMA) said the average retail price of sugar was Rs57.7 / kg in 2017 and dropped to Rs53.85 / kg in 2018. However, at the end of 2019, sugar prices increased after exports and until September of that year. the price reaches Rs70.91 / kg, taking the average retail price to Rs64.27 / kg. The government has imposed a ban on sugar exports in February this year only after the damage had occurred.
PSMA, in an earlier report, projected sugar production would exceed 5.2 million tons for the current fiscal year 2019/20, and with an remaining inventory of 1.39 million tons from 2018/19 the total commodity availability would reach around 6.6 million tons. The Pakistan Competition Commission underlines the inability of factories to export sugar at an international competitive level because most mills are heavily dependent on sugar as a product and cannot be diversified – utilizing by-products optimally – to reduce costs.
Government departments appear to be lacking in their assessment of price levels by not being aware of their impact on sugarcane production, and consequently sugar by not following the same active forecasting. “The sugar sector suffers from inefficiency at all levels,” the CCP said in a report last year. “Serious efforts are needed to design appropriate government interventions, improve the quality of sugar cane, improve and diversify the production process, and increase export competitiveness.”
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