Cabinet refuses to ratify sugar export

Directs industries ministry to prepare fresh case after reviewing all parameters

ISLAMABAD:

The cabinet has deferred export of a further 100,000 tons of sugar till the start of new crushing season and directed the Ministry of Industries to bring a fresh case after taking into account all relevant parameters.

Earlier, the Economic Coordination Committee (ECC) allowed export of 100,000 tons of sugar, which was tabled before the cabinet for its nod in a recent meeting.

Sources said that the cabinet refused to ratify the ECC's decision and directed the Industries and Production Division to refer back the case to the ECC for reconsideration in a holistic manner.

It gave directives that all relevant parameters should be taken into account including the retail prices, available stocks and domestic requirement of sugar till the start of next crushing season later this year.

Separately, the Sugar Advisory Board (SAB) held a meeting, headed by the federal minister for industries and production, on August 21, 2024, where it reviewed the sugar stock data provided by provinces and the Federal Board of Revenue (FBR) for crushing year 2023-24.

All stakeholders agreed that there was a stock of 2.773 million metric tons as on August 15, 2024 and total consumption during the last eight and a half months was 4.797 million metric tons.

It was noted that in the next three and a half months, the expected sugar offtake would follow the same pattern as was observed in the previous eight and a half months. Therefore, the consumption would stand around 1.974 million tons.

After taking into account the planned export of 0.055 million tons out of the total of 0.150 million tons and possible export of 0.040 million tons to Tajikistan, the carry-over stock for next year would be 0.704 million tons.

SAB meeting participants, after detailed deliberation, agreed that even if export of 0.10 million tons was allowed, the opening inventory for the next crop season was expected to be 0.604 million tons, which would be higher than the average one-month national consumption.

For that reason, SAB recommended an additional export of 0.10 million tons of surplus sugar with the same terms and conditions as allowed by the ECC in its decision dated June 13, 2024 with following modifications:

In view of the procedural delays encountered during the export of sugar, the period allowed for export from the date of quota allocation by the respective cane commissioner may be extended from 45 days to 60 days.

It was pointed out in an ECC meeting that export proceeds would be received in advance in the case of Afghanistan only through banking channels. However, export proceeds in the case of Letter of Credit (LC) may be allowed within a period of 60 days since the opening of LC.

During the ensuing discussion, the Industries and Production Division explained that 0.15 million tons of sugar was allowed to be exported via ECC decision dated June 13, 2024.

The ECC observed that the benchmark for sugar export should be the wholesale price instead of the retail price, which would ensure appropriate monitoring of prices.

The forum also proposed the deregulation of sugar sector, formulation of a sugar policy and proper zoning for sugarcane crops in order to cater to the requirement of the country.

The Ministry of Planning, Development and Special Initiatives added that the Pakistan Bureau of Statistics' (PBS) dashboard provided both wholesale and retail prices on a daily basis, which would help monitor the prices effectively.

The ECC was informed that ex-mill prices were not an indicator of price trends in the market as reportedly the sugar mills involved in price manipulation had investors who hoarded stocks outside the mills in separate warehouses.

The ECC directed the Industries and Production Division to ensure daily monitoring and review sugar stocks and prices. In case any spike in prices was noted, action should be taken against the violators forthwith.