The government on Monday turned down the demand of sugar millers for export of 1 million tons of sugar and said that surplus stocks were not independently “verifiable”, staving off the pressure for now.
A meeting between Finance Minister Ishaq Dar and the representatives of Pakistan Sugar Mills Association (PSMA) remained inconclusive. In the huddle, Minister for National Food Security and Research Tariq Bashir Cheema contested the claim that about 1.065 million tons of sugar was available in the country.
“Export permission has not been given and we will meet again on Thursday,” Cheema told The Express Tribune after the meeting. He added that until the sugar stocks were verified independently, the government would not grant permission for export.
“Floods have washed away 40% of sugarcane crop in Sindh and we also have to consider the sugar requirement of next year before giving the go-ahead for export,” he emphasised.
PSMA has threatened that they will not start the new sugarcane crushing season until the export of 1 million tons is allowed. Its chairman also contested Cheema’s viewpoint during the meeting.
Sources said that the government’s concern was that if sugar export was allowed, then prices in the domestic market would rise, which it could not afford at this time.
Dar emphasised the need for maintaining the strategic reserves of sugar and keeping prices at current levels for providing maximum relief to the people, according to the Ministry of Finance. He assured the PSMA chairman that the government was well aware of the issues being faced by the industry as well as sugarcane growers.
Average sugar consumption in Pakistan is estimated at 596,000 tons per month and the current stocks are sufficient for only 54 days.
The government’s assessment is that due to the widespread damage to the sugarcane crop, the sugar production will be 260,000 tons less than the annual consumption requirement next year. However, the millers disagreed, arguing that they would still have surplus of 750,000 tons.
“The government of Punjab has verified that there will be 400,000 tons of surplus sugar this year but the federal government is not willing to accept this number,” said former PSMA chairman Zaka Ashraf.
He, however, was of the view that the finance minister was very positive and another
meeting would be held in the current week.
“I fail to understand whether the government is not giving permission for export due to political reasons or it is a matter of ego,” remarked PSMA Chairman Asim Ghani Usman in a post-meeting media talk.
He said that the Punjab government had increased sugarcane prices by 33% to Rs300 per 40 kg and “with such an increase in input cost, how can the prices remain unchanged”.
At Rs300 per 40 kg, the cost of sugar production will come to Rs105 per kg for the efficient mills and Rs115 per kg for the less efficient mills in the northern region, according to a sugar mill owner.
He said that sugar prices were bound to increase after the Punjab government’s decision to increase the sugarcane rate.
Dar assured the PSMA delegation that the government would address and resolve their issues at the earliest and extended full support and cooperation to them, according to the finance ministry.
The PSMA chairman said that the Punjab government had instructed them to start the crushing season from November 25 and the association would soon review the order.
Due to the delay in starting the crushing season, the farmers have not been able to plant wheat that may create food security issues next year.
But Usman reiterated that the sugar mills had already surplus stocks from the last season, which were enough to meet the national requirement till January 15.
Published in The Express Tribune, November 22nd, 2022.
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