Challenges of Raw Sugar Imports and Price Controls in Iranian Sugar Factories

The government-approved sugar prices against world market prices, sudden changes in the exchange rate against the approved official prices, and variable tariff policies against the regulated prices for white sugar are other risks of this industry in recent years.

One of the events that has always affected this area is the temporary ban on the import of raw sugar and the creation of numerous problems for raw sugar refining factories, because at a certain point in time, a huge volume of raw sugar is imported into the country, and at that time, raw sugar refiners are not able to absorb all the imported raw sugar, and traders also enter into contracts with sugar beet and sugar factories to refine raw sugar. This decision causes the refining factories to lack raw materials throughout the year.

Also, due to the regulated price of white sugar, traders are usually reluctant to send raw sugar to refining plants far from ports (especially Imam Khomeini Port), because the transportation costs are not cost-effective for them and it is difficult to calculate the fare separately. However, the transportation costs are ultimately imposed on the consumer.

Currently, sugar does not use preferential currency. The market is set up to import raw sugar, and refined sugar made from raw sugar will be slightly more expensive than domestic white sugar. From this perspective, it will not pose a threat to domestic production.

Smuggling of raw sugar does not currently occur because the raw sugar currency has entered the organized market, and smuggling of goods occurs when there is a high price difference of about 40%. Smuggling of sugar from Iran used to occur due to the huge price difference resulting from government subsidies in Iran.

Allocation of subsidies to sugar-intensive industries: an opportunity or a threat?

She continued to discuss whether allocating subsidies to sugar-intensive industries is an opportunity or a threat and said: Given that sugar does not use preferential currency, the market is organized around the import of raw sugar. Therefore, no subsidies are paid to sugar consumers, both industries and individuals.