Minister sets aside SAB recommendations on sugar export quantity

Commerce Minister, Engineer Khurram Dastgir Khan is said to have set aside the recommendations of Sugar Advisory Board (SAB) on sugar export quantity by slashing it by 50,000 tons to 250,000 tons from 300,000 tons, well-informed sources told Business Recorder. The Board, sources said, had recommended the export of 0.3 millions of sugar by March 31, 2017 but the Minister trimmed the quantity prior to sending a summary to the Economic Co-ordination Committee of the Cabinet.

The sources said, on the request of Ministry of Commerce, a meeting of SAB was held on December 19, 2016 in the Ministry of Industries & Production under the chairmanship of Secretary, Industries & Production, Chaudhry Khizer Hayat Gondal. The agenda was to evaluate the claims of Pakistan Sugar Mills Association (PSMA) regarding the inventory position of sugar stocks before the start of the crushing season 2016-17, estimated production of sugar in 2016-2017, estimated consumption and surplus sugar and sharing its findings with the Ministry for a further action.

The representative of Food Department, Khyber Pakhtunkhwa (KP), informed the Board that the cultivated area for sugarcane had increased somewhat, however, unlike the previous years, recovery rate from sugarcane was significantly reduced in KP. He attributed the low recovery rate to a lack of rains and high temperature as compared to the corresponding period of previous years.

Secretary Industries asked him to provide the revised expected production figures in the light of new estimates. In response, revised expected production figures of 0.270 million tons were intimated to the Board besides confirmation of inventory of 0.040 million tons in KP before the start of crushing season 2016-2017. The Cane Commissioner, Sindh, revealed that the acreage of land in Sindh on which sugarcane is cultivated has remained more or less the same in 2016-17 and confirmed the figures of inventory position of 0.310 million tons before the start of ongoing crushing season and expected sugar production of 1.90 million tons during 2016-17.

The Assistant Cane Commissioner, Punjab, stated that cultivated area of sugarcane in Punjab has increased by 12% and it is expected that sugar production estimates of 2.81 million tons communicated earlier during the crushing season 2016-17 have increased by 14% as reported by the crop reporting services in their estimate. He further stated that during the crushing season 2016-17 sugar production in Punjab will be over 3.23 million tons. Inventory position of 0.646 million tons in Punjab before the start of crushing season 2016-17 was also confirmed by him.

Secretary Industries asked for observance of extreme caution in calculations and, therefore, advised to take into account the estimated consumption of 13 months instead of 12 months and the impact of reduced recovery rate in KP to properly work out the surplus sugar for export purposes.

Secretary Industries and Production also asked Commissioner, National Food Security, Ministry of National Food Security and Research for his views on the agenda before the Board especially the estimated production of sugar during the crushing season 2016-17. In response, he apprised that since the cultivated area during the current crushing season has registered an overall increase of 10% vis-a-vis the last crushing season, sugar production is also expected to increase proportionately during the current crushing season 2016-17.

The sources said Muhammad Ashraf Joint Secretary, Ministry of Commerce (MoC) while expressing his views, stated that the mandate of MoC is to promote exports from Pakistan. However, it is for the Ministry of Industries & Production and Finance Division to evaluate possible impact of proposed export on the price of sugar in the domestic market. He also expressed surprise on regular increase in the price of sugar over the years despite the fact that the price of sugarcane has remained more or less the same during the last three years. Secretary Industries intervened that Board needs to focus on the agenda before it as the meeting of the SAB has been convened on the request of Ministry of Commerce with specific agenda as already explained at the very outset of the meeting. However, he was advised to reflect his concerns on the summary for the ECC to be submitted by Ministry of Commerce.

Chairman, PSMA, in his turn, explained that the inventory position, estimated production and consumption in their reference made to the Ministry of Commerce were based on the position up to September 30, 2016. He expressed the opinion that with the decrease in temperature, sucrose content in sugarcane will increase; resultantly recovery rate will also improve. The Board was also informed that 78% of sugarcane is crushed for production of sugar whereas the remaining 22% is utilised for fodder and seed. He also endorsed the advice of Secretary Industries for inclusion of month of October in consumption figures and the impact of reduced recovery rate in KP for working out figures of surplus sugar during 2016-17 to avoid any imbalance in demand-supply situation.

The Board evolved a consensus and concluded that 0.3 million tons of surplus sugar may be considered for export up to March 31, 2017 simultaneously maintaining strategic reserves of 0.53 million tons