Sugar producers have approached the government for seeking permission for export of another 850,000 metric tons of sugar in two phases, inviting criticism as prices are already high in the domestic market.
The request for export of the sweetener was tabled in a meeting of the Sugar Advisory Board on Tuesday.
Earlier, the government linked the export of sugar with an increase of Rs2 per kg in retail price, meaning that if rates increase by Rs2 in the country, exports would he halted. Now, the sugar industry is asking for linking exports with a rise of Rs15 per kg in the domestic market.
However, the Sugar Advisory Board turned down the plea for export of additional sugar, stressing that first price stability should be ensured in the local market.
Minister for industries was of the view that sugar export could not be allowed and he even refused to consider the proposal, saying prices should be stabilised in the domestic market.
Already, permission for export of 150,000 metric tons worth $90 million had been granted and their shipments started on July 16, 2024. Now, in the second phase, the industry is seeking approval for export of 500,000 tons worth $300 million.
According to industry players, around 1.2 million tons of surplus sugar was available by mid-July, which will increase to 1.5 million tons by November.
In the third phase, sugar producers are looking for export of 350,000 tons worth $200 million.
Since the end of 2023-24 sugarcane crushing season around March 15, export of 150,000 metric tons has been allowed. So far, 21,218 tons have been lifted from sugar mills for shipments.
However, consignments carrying only 6,800 tons crossed borders by July 20, 2024. Thus, “the quantity of sugar exported so far is very negligible.”
Industry players pointed out that only four months were left before the start of new crushing season and asked how they would be able to export such a large surplus during the limited time period.
It emphasised that exports against Letters of Credit (LCs) should be allowed so that cargo shipments via sea route could commence.
Afghanistan has a limited capacity to absorb sugar supplies from Pakistan and the time period for exports should be 60 days instead of 45 days because of issues related to the Federal Board of Revenue (FBR) and banks, it added.
The industry stressed that the ex-mill sugar price benchmark may be increased to Rs150 per kg for the second phase of export due to increase in withholding tax from 0.20% to 2%. Its net impact on sugar price is estimated at 1.8% or Rs2.52 per kg.
The industry claimed that the carryover cost due to bank markup of Rs2.25 per kg per month for the June-August 2024 period would be Rs6.75 per kg. Therefore, the total impact is estimated at Rs9.27 per kg.
It called for a review of retail price benchmarks while keeping in view the imposition of federal excise duty of Rs15 per kg on the processing and packaging of sugar.
For the third phase, according to sugar mills, in view of a potential bumper sugarcane crop for the 2024-25 crushing season, which is expected to produce 7.5 to 8 million tons of sugar and create a surplus of 1.5 to 2 million tons, permission for export of 350,000 tons valuing at $210 million must be planned for September 2024 to manage at least two-thirds of the existing surplus. “This will ensure timely start of the new crushing season.”
Millers emphasised that it would also ensure timely payments to sugarcane growers and continuity in plantation of sugarcane crops.
Federal Minister for Industries and Production Rana Tanveer Hussain on Tuesday directed chief secretaries to take all possible measures to stabilise retail sugar prices across the country.
The minister chaired the Sugar Advisory Board meeting to review the availability of sugar stocks and price trends, a statement said.
He pointed out that ex-mill prices of sugar had remained stable in recent months and directed provinces to strictly monitor retail prices, as maintaining sugar rates at existing levels was the primary responsibility of the government.
He warned that any increase would not be tolerated under any circumstances.
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