Most of the recent proposals of sugar industry approved by the Economic Co-ordination Committee (ECC) of the Cabinet originated from the PSMA Punjab.
Sugar industry argues that working paper prepared by the Ministry of Industries for Sugar Advisory Board (SAB) and discussed in the meeting held on May 29, 2013 clearly spelled the need for disposal of surplus stocks. All stakeholders who attended the meeting were of the considered opinion that current stocks would last until first quarter of 2014 which would have serious repercussions on the industry’s capacity to fulfil its financial and other obligations for want of sale of stocks.
The stakeholders suggested that TCP should buy the surplus stocks to build and maintain strategic reserves for market intervention and to ensure uninterrupted supply to Utility Stores Corporation (USC) which cater to the poor segments of society, the sources added.
During the recent meeting of the ECC, 100,000 tons of sugar was allowed for procurement by the TCP and that too in two tranches of 50,000 tons each. Presumably, the decision to buy in small quantities was taken with a view to keeping the domestic price of sugar at a reasonable level.
PMSA Punjab maintains that sugar is in surplus in the country and the industry is constrained to sell below cost, which may result in defaults to banks. The Association has also cited an example of the US Department of Agriculture recently which bought sugar from domestic growers, the government’s first direct intervention in the nation’s sugar market in more than a decade. The USDA paid $43.8 million for the sugar but averted an expected $110 million in forfeitures of sugar price support loans. It then exchanged the sugar with domestic refiners for import credits. The USDA bought 91,238 MT tons of sugar and traded it for import of credit worth 299,153 tons.
Normally, sugar crushing season starts from November 1, every year but for the last two years crushing is not commencing on time as the mill owners cited different reasons for the delay.