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Inland subsidy for export of sugar




  • Pakistan Sugar Mills Association has strongly protested to the caretaker Prime Minister of non-release of subsidies to the Mills on exports equivalent to inland freights. In a letter to the PM the Association says. The ECC of the cabinet had approved inland subsidy @ Rs 1.75/kg to facilitate export of sugar on fast track basis to enable the sugar mills to off load their surplus inventories and pay the grower”s dues. 

    However, it has been learnt through newspaper that the Government has withdrawn the facility considering it to be politically motivated. In this regards, we again submit that in the year 2012-13 Pakistan had bumper sugarcane crop of about 62 million tonnes having estimated sugar output of 4.7-4.8 million tons. 

    The carry forward stocks from the last year are about 1.4 mm tons, this makes a total availability of more than six mm tons of sugar against the domestic requirement of about 4.2-4.4 million tons. Due to this, the Government allowed export of sugar for two main reasons, one to off load the surplus inventories and second to improve liquidity of the mills to pay off grower”s dues. 

    The export of sugar was allowed from January 2012, however, it could not take place at the required pace due to the declining price trend in the international market coupled with higher cost of sugar production because of 25% increase in the sugarcane support price in Pakistan, The government then constituted a committee headed by Special Assistant to the Prime Minister to encourage export and to come up with a mechanism for timely export of sugar, even then, the export could not take place due to surplus inventories in the international market. To resolve the issue and to give breathing space to the sugar industries the Government therefore allowed freight subsidy @ Rs 1.75 kg. 

    Considering the above mentioned grave situation, if the subsidy is withdrawn, then we fear that the sugar industry may not be able to export the allocated quantity of 1.2 mm tons which will delay growers payments and adversely effect the growers purchasing power to feed the next sugarcane crop with seed and timely fertilisers. 

    We, therefore, request for the continuation of ECC decision that was taken in the national interest to ensure timely payments to the farmers and generate more than US $600 million of foreign exchange needed to pay foreign debts. 

    Our reporter adds: Ban is on subsidy payment to the mills as per orders of the ECP, until May 11th. Once the elections are over and MoF can release the funds, subsidy payments can be made as per ECC decision. 

    Copyright Business Recorder, 2013

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