Additional quantity: Industry seeks to export sugar


The domestic sugar industry has sought permission to export additional quantity of 0.5 million tons of sugar without any rebate to avert default in payments to growers and dispose of surplus commodity at attractive prices in the international market, sources close to Secretary Commerce.

On March 3, 2017, the industry forwarded its demand through a letter to the Secretary Commerce, Azmat Ali Ranjha, who unofficially is tipped as new Secretary Cabinet and expected to be replaced by Younus Dagha, incumbent Secretary Water and Power.

The copies of letter have been sent to Minister for Finance Minister, Senator Ishaq Dar, who is the Chairman of the Economic Co-ordination Committee (ECC) of the Cabinet, which takes sugar export decisions in consultation with other ECC members, Minister for Commerce, Engineer Khurram Dastgir Khan, Secretary Finance, Tariq Bajwa, Secretary Ministry of Industries and Production, Khizer Hayat Gondal and Secretary Ministry of National Food Security and Research (MNFSR), Abid Javed.

Secretary Commerce, Secretary MoI&P and Secretary MNFSR are the members of ECC committee headed by Commerce Ministry which is tasked to review price of sugar on a monthly basis and submit a report to the ECC.

According to the letter, a copy of which is available with Business Recorder, sugar industry claims that as per crop report presented by the Ministry of National Food Security and Research during the previous meeting of Sugar Advisory Board held on December 19, 2016, sugarcane production was forecast to be in excess of 71 million tons as area under cultivation increased due to timely payments made to sugarcane growers. Sugarcane yield has also shown an improvement compared to preceding years, resultantly, the sugar industry foresees a record sugarcane production during the current crushing season.

The industry has also stated that mills'' utilisation of sugarcane is around 80 per cent which means 56.8 million tons of sugar will be crushed for producing sugar. The average sucrose recovery on all Pakistan basis is about 10 per cent hence sugar industry safely assumes a total production of about 5.68 million tons of sugar as against previous conservative estimates based on which permission to export 0.225 million tons was granted.

Sugar industry argues that it has not sought export rebate as the international market prices are currently at a level where the industry can export without any subsidy from the government. Sugar has emerged as an export item for the last five years and earning foreign exchange for the country due to supportive policies of the government. The sugar industry has also requested the government to formulate long-term sugar export policy.

Sugarcane crushing season is expected to continue till end March in Central and North Punjab and April 10 in South Punjab.

The industry has claimed that the entire quantity of 0.225 million allowed for export till March 31, 2017 is already booked with the international buyers but permission from State Bank of Pakistan (SBP) is in the pipeline which takes 10-15 days. Commercial Banks imposes 15 per cent fine on L/Cs if export orders do not materialise with 45 days.

"Industry has already requested the government to extend the export deadline till May 31, 2016 because of border closure with Afghanistan, besides waiver of 45 days," the sources continued.

The first notification was issued on January 19, 2017 for export of 0.225 million tons of sugar till March 31, 2017 which implied that total 69 days was given for export of entire quantity. However, during this period, Afghanistan border was closed after consecutive terrorists'' attacks across Pakistan.

Currently, domestic consumption is around 5.1 million tons per annum (0.425 million tons per month), if carryover stock of 1.2 million tons till September 30, 2016 and current year''s estimated production of 5.68 million tons are clubbed; the total stock is around 6.9 million tons. This implies that if 5.1 million tons of sugar is excluded from total stock of 6.9 million tons, the surplus is around 1.8 million tons. However, after exclusion of two months i.e. October and November, 2016, consumption of 0.850 million tons, surplus is 0.950 million tons of which the government has already allowed export 0.255 million tons till March 31, 2017. This implies that 0.650 million tons is still surplus.

When contacted, Secretary General, Pakistan Tahreek-e-Insaf(PTI), Jahangir Khan Tareen, who is also a mill owner supported the proposal of sugar industry, saying that export of surplus sugar without subsidy is a better option to clear payments of growers.

On a petition of Jahangir Khan Tareen, Lahore High Court has ordered closure of two sugar mills of ruling Sharif family in South Punjab.