In recent months, the price of sugar in Pakistan has crossed Rs 100 per kg.
Even now the price of sugar in different parts of the country is Rs 95 to Rs 100 per kg, which was Rs 80 per kg in November and December last year.
In a press conference, Prime Minister's Advisor on Home Affairs, Shahzad Akbar, described the rising prices of sugar as 'speculators' and said that speculators artificially inflate the price of sugar.
He said that the Federal Investigation Agency (FIA) has taken action against these bookies. The records found in the action have shown that the bookies have artificially increased the price of sugar.
People and experts in the food sector have confirmed the involvement of bookies in the sugar trade. They have said that the fluctuations in the supply, demand, and prices of sugar are due to speculation.
He said that two types of market forces play a role in this. A market force works based on supply and demand.
The second type of forces create artificial crises, which are based on speculation and rumors, artificially increase prices and make an unfair profit.
How is speculation played out in the sugar trade?
Experts say that speculators artificially increase the prices of sugar by speculation. These speculators decide that if the price of sugar today is 80 rupees per kilogram, then it has to be increased to 90 rupees next month, for which they create an artificial crisis.
Wahid Memon, a businessman associated with the sugar trade, said that this betting would have been played in two ways. The first is that the speculators give the earnest money from the sugar mill, deciding that they will pick up the delivery in the coming time.
The second way is that the merchants of the sugar decide between themselves and deal with the sugar, which does not include the earnest nor the delivery of physical sugar.
Waheed said that if the current price of sugar in the market is Rs 90 per kg, then the speculators start doing future deals at a higher price. Sugar mills also do this deal at a higher price, but there is no physical delivery of sugar in it.
In this regard, Shams-ul-Islam, an expert in the foodstuff department, said that sugar is bought in the betting business and its delivery order is also taken, but its physical delivery is not given. This delivery order is sold from one hand to another, which increases the price of sugar.
He said that in the same way speculators also do this work in another way, in which there is no delivery order and no payment is made. Sugar is bought and sold on a fake basis only by speculation.
For example, if the price of sugar is 80 rupees per kilogram, then it is estimated that it can go up to 90 rupees in the next month. This creates a crisis in the market which causes artificially inflated prices.
Waheed Memon said that since there is no physical delivery of sugar, when the deals are written, artificial purchases start, which increases the price in the market.
Where is the betting on sugar?
Talking about the speculation in the sugar trade in Pakistan, Waheed Memon said that it has two major centers, one is the center Punjab and the other in Karachi. He told that because sugar production is high in Punjab, Lahore is the biggest center and the bookies are more active there.
Shams-ul-Islam said that Akbari mandi is the biggest grain market in Lahore and sugar is also traded there. Sugar bookies work in this market. Similarly, the Jodia market of Karachi is also the base of the bookies.
Waheed Memon said that this type of business is more in Babur Center of Akbari Mandi, Lahore. Babur Center is the center of sugar dealers in Punjab. Similarly, in Karachi, there is a camp of big sugar dealers in the kutcha street of Jodia Bazaar.
Shams-ul-Islam said that more work of betting is done during the crushing season. He said that the sugar crushing season ends in March. At that time there is a possibility of a drop in prices due to excess supply. But the price is not allowed to be reduced through betting, rather it is increased further.
Waheed Memon said that the work of betting has been going on for many years, but in the last few years, it has increased quite a bit. He said that basically, it consists of 40 to 50 big groups which artificially increases the prices.
Who lives in betting and who lives in harm?
When sugar consumption is reviewed in Pakistan, up to 30 percent of sugar is used domestically and 70 percent is commercially used, which is used in beverages, sweets, and medicines.
Sugar importer Aaron Agar said that in the speculative business, the price of sugar is increased based on speculation. And this increased price is charged from the consumers, so the consumer is the biggest loser. He said that sugar mills and speculators live in profit, as they are economically benefited by the increased prices.
Waheed Memon said that only those who play betting in the business of betting take advantage. Because they do fake transactions with no documentary evidence. There is not much investment in it, but there are fake deals of sugar. Because in this deal, the deal is done by paying only 10 percent earnest money, then it is sold further and no tax is paid in it.
Waheed said that speculation in the sugar trade is against the law, as prices are artificially raised instead of the real reasons for supply and demand.
Shamsul Islam said that there is no effective system of commodity exchange in Pakistan, due to which the business of sugar is being speculated. He said that sugar is a 'political crop' in Pakistan because it involves politicians and most of the sugar mills belong to politicians. This is the reason why the sugar mafia and bookies are playing openly in this area.
Hasanain Mirza, a member of the Sindh Assembly involved in the sugar mill business, said that the prices of sugar interfere with the supply and demand of the market. Refusing to comment on the betting, he said that he did not want to say anything about it.
He said that deals are done around the world for the time being, but he agreed that all those deals are done under a special regulatory framework.
When asked about the role of the bookies in increasing the price of sugar, he said that he knows that this time the cost of production of sugar was also high. Because sugar mills bought sugarcane from farmers at a price higher than the government price.
The support price of sugarcane from the Sindh government was Rs 200 per mana (40 kg a mana), but the sugar mills bought a price of Rs 400 per mana due to the low supply of sugarcane.
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