Fearing price instability, govt defers decision on sugar export

Millers were seeking export of another 1.2m tons due to surplus

ISLAMABAD: Economic managers of the country have put off a decision on more sugar exports in an attempt to keep prices stable in Ramazan following fears that industry giants may manipulate the situation to push prices up and earn billions of extra rupees.

The move came in the wake of recommendation of the Sugar Advisory Board (SAB) to the government to allow export of 1.2 million tons of the sweetener without any time limit.



The millers sought the government’s nod for further exports, though they had failed to ship the allocated quota earlier and got extension in the export deadline. In the past, sugar millers have exploited the permission for exports in order to increase prices in the domestic market and mint money from consumers.

However, now, the Pakistan Sugar Mills Association (PSMA), an industry group, has agreed to commit “in writing that it will ensure price stability during the month of Ramazan.”

In a meeting of the Economic Coordination Committee (ECC) held on June 7, the participants noted that according to the PSMA, the sugar industry had produced a record quantity of the commodity, leaving a surplus, which was causing delay in payments to the sugarcane growers.

The association underlined the need for convening a meeting of the advisory board in order to review the overall supply and stock position of the commodity and consider the request for further exports.

Its request and SAB’s recommendations had been discussed in a huddle of the Inter-ministerial Committee held on May 25.

The Ministry of Industries and Production told the committee that SAB, after reviewing the situation, had agreed on sugar production estimates of 7.043 million tons for crop year 2016-17 with carryover stock of 0.996 million tons. This would take the total quantity to 8.039 million tons.

Of this, the country would consume 5.1 million tons and keep a buffer stock of 0.630 million tons for 45 days. Another 0.42 million tons would be exported as permitted by the government, which would take the total demand to 6.155 million tons.

After all this, the sugar surplus would be 1.844 million tons, of which SAB had recommended export of 1.2 million tons without any time frame.

The committee noted that out of the 0.425 million tons allowed for export, the State Bank of Pakistan (SBP) had allocated a quota of 0.390 million tons. By May 22, around 0.308 million tons was exported, which constituted 72% of the permitted shipments.

The Inter-ministerial Committee recommended that the decision on further exports should be deferred till the last week of Ramazan in order to maintain price stability during the month.



However, it said the deadline of May 31 for sugar exports may be extended till July 31, which was approved by the ECC.

Published in The Express Tribune, June 20^th, 2017.

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