Ministry hints at cancelling sugar export plan

Commerce Minister, Engineer Khurram Dastgir Khan has convened a meeting of sugar price monitoring committee on Wednesday amid reports that sugar price is showing a continuous steep increase in domestic market after the ECC approved export of 0.250 million tons of sugar by March 31, 2017.

The ECC headed by the Finance Minister Ishaq Dar, in its meeting held on December 28, 2016 had directed the Commerce Ministry to regularly monitor the domestic price of sugar and in case of any unjustified/unreasonable increase in its price the committee should immediately recommend stopping sugar exports to the ECC.

Last year government had set a condition that if sugar price rises by 10 percent, export permission would be annulled, but this time the limit of 10 percent price increase has not been imposed because last year the sugar industry reportedly manipulated the condition. "This time we have not tied our hands and kept the price issue open and if we feel that sugar price is being manipulated by the millers in the domestic market, Commerce Ministry will suspend the sugar export permission immediately," the sources continued.

According to official documents, Pakistan Sugar Mills Association (PSMA) had intimated that expected sugar production during the sugar season 2016-17 would be 5.5 million tons, if the carry forward stock of 1.2 million tons (as on September 30, 2016) was added to the production figures for the current crop, with total availability at 6.7 million tons. Assuming domestic consumption of 5 million tons during this year (up to September 2017), there would be a surplus of 1.7 million tons. PSMA had requested that they may be allowed to export 0.5 million tons of sugar till March 31, 2017 without export rebate as the international market was currently at a level where the industry can recover production costs.

Commerce Ministry also referred PSMA's claims regarding sugar production and availability of exportable surplus to the Sugar Advisory Board (SAB) in the Ministry of Industries and Production (MoI&P) for advice. SAB in its meeting held on December 19, 2016, had agreed on the production estimate of 5.4 million tons for the crop year 2016-17, the carry over stock of 0.996 million tons before the start of crushing season 2016-17 and the availability of 0.871 million tons exportable surplus after accounting for the consumption of 5.525 million tons for 13 months@ 0.245 million tons per month. SAB had recommended export of 300,000 tons sugar by March 31, 2017, simultaneously maintaining a strategic reserve of 0.53 million tons.

Commerce Ministry further stated that PSMA's request and the SAB's recommendations were discussed in the meeting of the inter-ministerial meeting, constituted by the Prime Minister under the chairmanship of Commerce Minister with Secretaries of Commerce, National Food Security and Research, Industries and Production and Additional Secretary as members) held on December 21, 2016.

During discussion in the ECC, Minister of State for Information Technology referred the minutes of the SAB meeting wherein it had been stated that there was a regular increase in the price of sugar over the years despite the fact that price of sugarcane has remained more or less the same during the last 3 years. Chairman PSMA informed the meeting that production cost of sugarcane had increased and presently per kilo cost of sugar was Rs 64-65. He further stated that Rs 230 billion outstanding payments had been made to the sugarcane growers and a handsome foreign exchange of $132 million had been earned through export of sugar.

Secretary Textile Industry maintained that due to decrease in the cultivation area, the production of sugarcane is likely to decrease during the next crushing season. Secretary National Food Security and Research responded that the area of cultivation had not declined however keeping in view the unfavourable weather conditions the production of sugarcane was likely to decline. One view was expressed that in case of export of sugar, the domestic price of sugar may increase.