Row over duty on sugar imports to hit consumers

KARACHI: Consumers are set to suffer by paying high price for sugar despite fall in sweetener’s rate in the international market due to conflicting interest in sugar trade. The sugar dealers and importers said that the government indecisiveness encouraged the sugar lobby to turn the situation to its advantage.

The on-going row between sugar industry and private importers over the regulatory duty (RD) on import of sugar may end up benefiting one side but it would be the ordinary consumer, who would suffer if the government fails to act decisively on time, dealers said.
Currently, sugar prices in the country are about 30 per cent higher than world prices and remain close to their all-time-high yet the millers are asking the government to impose regulatory duty on import of sugar, observed sugar importer Shamsul Islam Khan.

However, millers are pleading their case on the ground that they had paid much higher price for the sugarcane this season and it was much above the officially fixed price.

A leading miller from Sindh, Kasim Hashim, said the sugar industry this year suffered on many accounts. He said firstly, it has a short crushing season owing to smaller cane crop, and secondly, sugarcane prices, both in Sindh and the Punjab, were higher than the official support price.

Though yield in Sindh was better at 11 per cent than 8.5 per cent in Punjab, consequently, the industry suffered as large number of mills is located in Punjab.

However, importers alleged that strong sugar lobby sitting on both benches of the National Assembly is blocking sugar import and are pressing for the imposition of regulatory duty on its import. These interest groups least care about consumers and are only keen to fill their coffers, they added.

Mr Khan said that sugar price in the country is presently at around Rs65 per kg, whereas in the world market it has come down to $550 per ton C&F Karachi, which shows a fall of around 30 per cent from its peak price of $800 per ton in a single month.

He claimed that this means that the consumers are paying the highest price for sugar in the world. It is ironic that even the benefit of cut in sales tax from 16 per cent to 8 per cent on sugar had not been transferred to the end- consumers, he maintained.

Against this, the government has altered or cut sales tax on import of sugar, where in addition to this, one per cent excise duty and 3 per cent income tax is also paid. This means that millers are getting considerable protection at the cost of end-consumers, he added.

He said that sugar industry had two good years when mills profits have been unparalleled but it had been their demand that they should be allowed to sell sugar at world market rates.

However, when world sugar prices have fallen they are seeking regulatory duty on import of sugar so that they could protect their windfall profits.

The millers also made huge profits on export of molasses because of higher prices and similarly ethanol also fetched fabulous price for them in the world market, he added.