Price of sugar is likely to show further increase on account of fear of lower production in the country as compared with earlier estimates and putting Indian sugar on the negative list with the approval of the federal cabinet, well informed sources in Ministry of Industries told the Business Recorder.
“We are also considering slapping a ban on sugar export keeping in view the present and future scenarios,” the sources added.
The price of sugar has witnessed an increase of Rs 7-8 per kg in the retail market within weeks after reports suggested that local production is not matching estimates at the start of crushing season and ascertained by the government at different fora.
Javed Kayani, Chairman of Pakistan Sugar Mills Association, a representative body of sugar mill owners, has advised the government to remain vigilant about sugar situation and review its earlier decision regarding export in order to avert any chaos in the country.
On January 20, 2012, Ministry of Industries(MoI) had informed the Economic Co-ordination Committee(ECC) of the Cabinet that due to likely bumper sugarcane crop, sugar production would be 4.8 to 5 million tons while average annual consumption during the last three years was 3.8 million tons.
Thus a surplus of about 1.3 to 1.7 million tons was anticipated.
In January 2012, Economic Co-ordination Committee (ECC) of the cabinet allowed export of 0.1 million tons of sugar (5000 tons each) on E form, but this has not materialised so far.
“Due to prolonged winter and heavy frost, yield of sugarcane in various areas of the country is reported to be on the decline.
Keeping in view this situation, we suggest that the export of sugar should only be allowed after the final production figures are in hand and the crushing season is over,” the sources quoted Chairman PSMA Javed Kayani as stating.
The PSMA with the objective of avoiding any untoward situation has advocated building of further strategic reserves through Trading Corporation of Pakistan.
Kayani argues that as the GoP has recently entered into an agreement with Iran for barter trade, and intends to export 1 million tons of wheat and 200,000 tons of sugar against import of urea, there is a need for TCP reserves to take precedence over exports at this juncture.
Moreover, the crushing season is still in progress and supply of sugarcane has come to an abrupt end due to low yields in the fields.
Therefore, it is imperative to look at the actual production figures before any sugar can be considered for export.
However, the chairman PSMA said that they were hopeful that there would be no shortage of the commodity.
Meanwhile, the Punjab government through its chief secretary also wrote a letter to the federal government to allow export only after the crushing season was over.
The PSMA, sources said, had also proposed to the government that Trading Corporation of Pakistan (TCP) should be instructed to procure another 0.1 million tons of sugar from mills to build the country’s strategic reserves, adding that first priority should be given to the domestic requirements.
Presently, sugar millers are buying sugarcane at Rs 205 per 40 kg, Rs 55 higher than the notified price of Rs 150 per 40 kg.
According to the National Sugar Policy 2009, the government is required to maintain strategic reserves of 0.5 million tons to ensure sugar availability and price stability and make monthly USC interventions and the month of Ramazan.
Industries Ministry had suggested to the government that there was a need to keep 1.1 million tons of sugar in reserve against which TCP had old stocks of around 0.1 million tons.
Some of the ECC members opined in the ECC meeting on January 20, 2012 that allowing sugar export at this juncture was not feasible since as per cropping patterns 2013 was expected to be lean year and Pakistan might end up importing sugar.
TCP has already procured 78,000 tons of sugar from mills on the directives of the ECC but is not reportedly willing to procure more.
On the same day, the PSMA expressed it concern through a letter to the federal government for restrictions on export, Senator Islam-ud-Din Shaikh requested the Commerce Ministry put refined sugar on negative list to protect local sugar industry and growers who were not getting due return on their crops.
Senator Shaikh, who is a sugarcane grower and mill owner from Sindh, informed a Senate’s panel that sugar mills had produced one million tons of sugar surplus, requesting the government to allow export of 0.5 million tons.
Senator Haroon Akhtar Khan, who was also present in the meeting, expressed his concern over zero duty on imported sugar and argued that the move would destroy the local industry.
The committee headed by Senator Ilyas Bilour, in a unanimous resolution requested the Commerce Ministry to allow export of 0.5 million tons of sugar keeping in view the interests of sugar industry as well as growers.
Chairman PSMA Javed Kayani has already written a letter to the GoP to keep sugar on the negative list as dumping of sugar from India would only annihilate the growers and sugar industry in Pakistan.