KARACHI, Jan 21: Sugar price has surged to Rs40 per kg showing an increase of Rs6 per kg in the last 22 days.

At the end of December 2008, it was selling at Rs34 per kg at retail level. On Jan 1, 2009, it was available at Rs25 per kg. In many areas, some retailers are charging Rs42 per kg.

Sugar’s wholesale rate has now touched Rs37.60-37.80 per kg from Rs35.50 per kg early this month. Earlier in December the wholesale rate was Rs31.50 per kg.

Chairman Pakistan Sugar Mills Association (PSMA) Sindh zone, Abdul Wajid Arain told Dawn on Wednesday that the ex-mill rate of sugar has surged to Rs37 per kg from Rs35 per kg 20 days back. Besides, the government has also increased the sales tax.

“We are not responsible for the increase in sugar price on the retail side as it varies from area to area,” he said.

He said that the price of sugarcane has surged to Rs95 per maund from Rs81.

“The government should make the growers bound to provide sugarcane at Rs81 to the mills,” Wajid said adding that the growers are holding back supply in anticipation of further increase in the rates.

He added that sugarcane production has also declined sharply this year.

He said that sugar mills in Sindh had produced 400,000-450,000 tons of sugar from November to January and the production in the province was expected to range between 700,000-800,000 tons this year. He added that sugar was also being smuggled to Afghanistan.

Chairman Karachi Wholesalers Grocers Association (KWGA) Anis Majeed said that last year the rate of sugarcane fixed by the government was Rs63 per maund and there was a bumper crop.

However, millers had refused to procure sugarcane at that rate and purchased it at below Rs50 per maund that also on credit from the growers.

The growers were disappointed and decided to switch to other crops after getting low price last year.

Now when the sugarcane crop was lower than last year and the rates were fixed at Rs81 per maund, the growers were still not satisfied in selling the cane at this rate.

He said that as the millers were buying sugarcane at higher rates the cost of sugar production was also increasing and it was selling at higher prices. The millers were taking advantage of low production of sugarcane.

Sugar production is estimated at 3.5 million tons as against consumption of 4.2 million tons, leaving a shortfall of 700,000 tons.

He said the TCP and the private sector might have some buffer stocks but still there may be shortage of 200,000-300,000 tons sugar this year.