PM defers decision on surplus sugar export

It took the decision in light of the recommendations of an inter-ministerial committee


Shahbaz Rana September 08, 2017
A worker checks the flow of sugar inside a sugar factory. PHOTO: REUTERS

Prime Minister Shahid Khaqan Abbasi put off a decision on Thursday on export of surplus sugar amid concern over Rs19 per kg subsidy and the impact of shipping over 1.5 million tons on the domestic market.

The premier chaired a meeting wherein he was briefed on matters pertaining to the sugar industry, according to a statement issued by the Prime Minister’s Office after the meeting.

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The challenges faced by the industry relating to the permission for exports were also discussed. The Pakistan Sugar Mills Association (PSMA) - a representative body of the country’s millers - demanded that the premier allow export of 2 million tons of sugar and give a subsidy of Rs19 per kg to cope with low prices in the international market.

The millers claim that there is a glut of sugar in the local market due to carryover stocks from the previous year and surplus production in the last sugarcane crushing season.

Against the retail price of over Rs65 per kg, sugar in the international market is traded at 38 cents or Rs40 per kg. The millers want the government to pick the difference as they claim that the high cost of sugar was due to the fixing of sugarcane price at Rs180 per 40 kg by the government.

The subsidy will cost Rs38 billion to the finance ministry on the export of 2 million tons of sugar. In case of reduced exports at 1.5 million tons, the subsidy requirement will be Rs28.5 billion.

Industry people claimed that the Sugar Advisory Board, which also met on Thursday, recommended giving permission for the export of 1.5 million tons with a subsidy of Rs18 per kg.

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Officials said the PM called for settling the issue first in the Sugar Advisory Board and then bring it in the Economic Coordination Committee (ECC) for approval.

They said the premier also asked about the negative impact of sugar exports on the local market. The Ministry of Commerce would firm up its views on the proposal of allowing exports of 1.5 million tons and the subsidy demanded after receiving recommendation from the Sugar Advisory Board, said an official of the Ministry of Commerce.

The prime minister directed the ministry to work with the Sugar Advisory Board in an attempt to come up with short and long-term proposals for resolving the issues and problems faced by the industry.

In July this year, the ECC approved exports of 300,000 tons of sugar, in addition to the export quantity already allowed earlier.

It took the decision in light of the recommendations of an inter-ministerial committee that had proposed exports of 600,000 tons keeping in view the surplus stock of 1.475 million tons from the last sugarcane crushing season. The ECC did not approve subsidy for the export of 300,000 tons which, according to the industry people, was the reason behind the millers’ lack of interest in exports so far.

Published in The Express Tribune, September 8th, 2017.

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