During the current Season Cane Support price is expected to be in between

PKR 180-182 Per 40 Kg that will enhance pressure on sugar refinery with the
reduction in profit margins. The country's sugar industry is unwilling to commence
sugarcane crushing on time due to the interference of the Federal Government in
fixation of sugar prices far below sugarcane prices being fixed by the provincial
governments. This year sugarcane crushing season is expected to commence after the
Muharram holidays. Sugar prices are a function of various factors including policies
affecting sugarcane pricing, the supply of sugar to markets and import possibilities to
overcome demand supply gap, if any.
During the last crushing season, supply of sugar has superseded the demand which has
exerted downward pressure on the prices. Currently, the ex-mill price of sugar is around
Rs. 50/kg while wholesale price is around Rs. 51.5/kg. Prices are expected to remain
range bound till the start of next crushing season based on the availability of ample
carryover stock. The minimum price of sugarcane has witnessed an average increase of
383%, i.e., 386% each in Punjab and KPK and 378% in Sindh between 2001 and 2013,
whereas during the same period, the retail price of refined sugar has only increased by
99%. The figures show that since 2000-01, the minimum price of sugarcane has
increased five-fold, i.e., from Rs 35 per 40 k.g. to Rs 171 per 40 kg while the price of
refined sugar has increased from Rs 26.73 per kg.to Rs 53.25 per kg. The federal
government intervenes in the market to maintain supply-demand dynamics of a 'free
market' through supply of refined sugar in Utility Stores at subsidised rates.
According to trade sources, this years low sugar prices and the harvest of a record
sugarcane crop resulted in mills offering lower cane prices than the announced MSP
followed by delayed payments to the farmers. This is going to affect the next year
planting, so it is projected that during MY2014/15 sugarcane area will decrease by six
percent to 1.1 million hectares. Often, farmers harvest in October, at the beginning of
the cane harvest season, even though the sugar content is still developing and cane
prices are lower. The lower income is offset by the ability to plant wheat in November as
a second crop. The provincial governments support research, development, training of
farmers and transfer of new technologies to growers in its endeavor to raise cane yields
and sugar recovery rates. Agricultural universities and a few sugar mills also support
research and development (R&D) activities.
The federal government intervenes in the market to maintain supply-demand dynamics
of a 'free market' through supply of refined sugar in Utility Stores at subsidized rates.
According to Finance Minister Ishaq Dar sugar shouldnt be sold at subsidized rates as
price of sugar in the open market is quite reasonable. The government should take
measures from time to time to attempt the enforcement of a uniform price of refined
sugar across the country. The government should maintain the ex-mill price of refined
as low as possible through policy tools and interventions to protect the interest of
consumers, which has a direct impact on the cash flow, commercial viability, ability to
make timely payments to growers and profitability of the sugar mills and should impose
customs duty on import of sugar so that there is no dumping from the international
market to the detriment of growers' payments.