LAHORE, Jan 21: As some traders lobbying with the government for permission to import raw sugar – ostensibly to fill the supply and demand gap of around half a million ton this year – the producers say such a decision would distort the market and push the consumer price up.The permission to import raw sugar would expose the government’s inability to exercise control over the market price of the sweetener and give it to the importers at the cost of consumers, said a leading sugar producer.

“The far better policy would be to ask the Trading Corporation of Pakistan (TCP), which has 0.4 million tons of buffer stocks, to release sugar in the market if and when necessary to stabilise the market and thwart any attempt to take advantage of the gap between supply and demand,” the producer said.

The TCP could replenish its stocks by “matching import” of refined white sugar, added.

Sugar production is expected to drop to 3.5 million tons this year when the crushing season ends in April owing to a lower cane crop this year. The domestic sugar requirement is estimated to be close to four million tons. The producers argue that the domestic production and the TCP stocks would suffice the country’s consumption requirements.

The industry is opposed to raw sugar import because it would cause a new crisis for the producers, who claim to be paying a hefty price of Rs120-125 per maund on account of cane shortages and delay payments to the growers.

When contacted Pakistan Sugar Mills Association (PSMA) Punjab chairman Javed Kayani acknowledged that a lobby of some “unscrupulous” traders was trying to convince the government to permit import of raw sugar.

“If raw sugar is allowed to be imported the manufacturers will get a chance to make some money by refining it. But the industry doesn’t like the idea because it would prove to be devastating for all the stakeholders – producers, growers and consumers, and would hurt growth,” he said.

“Why should we import raw sugar for short-term financial benefit at the cost of domestic sugar economy?

It would have been a different story if the TCP had no buffer stocks to maintain market stability. Also, the TCP has infrastructure to import refined sugar to refill its stocks if and when it releases them in the market,” Mr Kayani said.

He was hopeful that the government would not fall into the trap of those elements because it would lose the initiative to maintain price stability in the domestic market.