Ministry to discuss prospects of barter trade with Iran

Ministry of Industries (MoI) has decided to submit a summary to the Economic Co-ordination Committee (ECC) of the Cabinet for export of 0.5 million tons of sugar. Th2 decision has been taken at a meeting between the Deputy Prime Minister, Chaudhry Pervez Elahi and Pakistan Sugar Mills Association (PSMA) led by its Chairman Javed Kayani on Thursday. 

In a letter sent to Prime Minister Raja Pervaiz Ashraf on September 5, PSMA Chairman Javed Kayani informed about the detailed forecast of production for the crop cycle 2012-13, together with carryover stocks position. PSMA has also briefed Chaudhry Pervaiz Elahi Deputy Prime Minister on issues relating to sugar industry wherein it was discussed that immediate approval to export 500,000 tons of sugar is of utmost importance before the start of next crushing season as the industry with carries over surplus cannot commence crushing without first exhausting its stocks. 

According to the letter, there is a significant difference between local and export price at the moment which means market is in oversupply and there exists a glut like situation. There is a huge crop of sugarcane ahead and PSMA estimates production of about 5 million tons which means growers’ payments relating to sugarcane supplies will be badly affected in the event of non-disposal of existing surplus stocks. Kayani cautioned that the government should take pragmatic steps in this regard. 

According to sources, pursuant to PSMA request, MoI has called a meeting of the Sugar Advisory Board on 1st October to discuss the possibility of sugar barter trade with Iran, sugar export position, sugar availability with TCP, sugarcane/sugar production figures and projections for 2012-13 season along with sugarcane payment position. The SAB meeting will be attended by all the stakeholders and it is expected that a summary will be taken for approval of ECC on Tuesday for export of 500,000 tons sugar. 

According to the letter, as provincial governments are in the process of announcing sugarcane support price for the next crushing season, the increase will further impact the cost of producing sugar in a surplus year. It said, “We envisage a production of about five million tons of sugar, which is likely to surpass all previous production figures. With an expected carryover of 400,000 tons of sugar and meeting the domestic requirement of approximately 4.2 millions tons, there would still be an excess of 1.2 million tons of sugar…. the disposal of which is mandatory. We therefore, suggest the following policy decisions: 

a) Government should allow export of 500,000 tons of sugar before commencement of next season. 

b) Iran wants to purchase 100,000 tons of raw sugar, the permission for which may also be granted as it can only be produced during the crushing season. 

c) Trading Corporation of Pakistan may kindly be given prior directions to keep 500,000 to 600,000 tons of sugar as strategic reserves to meet the requirements of Utility Stores Corporation. 

These measures would help the sugar industry make timely payments to sugarcane growers during the crop cycle 2012-13.” 

Sugar millers have also appreciated that the ECC during the year 2012 had allowed export in two tranches ie, 100,000 and 200,000 tons with the condition of export quota of 5000 tons per mill. “Though there has been a less physical export against contracts registered with State Bank of Pakistan due to decline in export price and severe competition from India and Thailand. We request you to direct SBP to cancel all those contracts registered with them against which no physical export has taken place so far and allow the remaining quantity to be exported before the start of forthcoming season to those mills who are willing to export so that the industry is in a position to reduce the carrying cost of sugar and fulfil its other obligations,” it said, adding that the moves will not affect the local market condition but instead will earn valuable foreign exchange for the country. 

Copyright Business Recorder, 2012

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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