Ministers clash over sugar export

The minister for industries and the minister for petroleum are locked in a row over sugar export with the latter recommending a halt to shipments whereas the former pushes for making exports in violation of a government decision.

The retail price of sugar has exceeded the benchmark set by the government, which makes it binding on the industries ministry to stop exports but it continues to be in favour of selling the sweetener in overseas markets.

Some sugar mills have also failed to make payments to growers out of their export proceeds, flouting another condition of the government.

The Economic Coordination Committee (ECC) had allowed sugar export by linking it with a certain price benchmark. It decided that exports would be halted if the retail price exceeded the benchmark.

Sources told The Express Tribune that a report of the Cabinet Committee on Monitoring of Sugar Exports revealed that the retail price had exceeded the benchmark, prompting the petroleum minister in a meeting of the monitoring committee to call for stopping exports but the industries minister opposed it and exports continued.

According to the report, the cabinet committee met on July 29 and August 1, 2024, where discussions were held on ex-mill and retail prices of sugar as well as payments to growers.

It was observed that while the ex-mill price remained well below the benchmark of Rs140 per kg, the retail price exceeded the benchmark of Rs145.15 per kg by Rs0.73 and Rs2.56 on July 11 and July 25, respectively.

Apart from that, some sugar mills were reported to have not used their export proceeds for payments to growers. Considering that in view, the petroleum minister argued in the second meeting that export quotas should be revoked.

The industries minister, however, did not agree with the proposal, stressing that the retail price was stable and instead of penalising the entire sugar industry for delay in payments to growers, the export quota of only those mills that had failed to make payments should be abolished.

It was agreed that a report would be submitted to the petroleum minister and, if required, a case may be sent to the federal cabinet for consideration.

The Ministry of Industries said that a draft report was accordingly submitted to the petroleum minister, who headed the cabinet committee, on August 6, 2024, which was returned on August 15 with the recommendation to the cabinet that sugar export may be halted immediately until all conditions were met.

The Ministry of Industries told the ECC that export of 150,000 metric tons of sugar had been approved on June 13, 2024.

While ratifying the decision on June 25, the cabinet constituted the Committee on Monitoring of Sugar Exports with the petroleum minister being its convener to review the ex-mill and retail prices along with focus on the following:

The ex-mill price shall not increase beyond Rs140/kg and the benchmark retail price will be taken from the Sensitive Price Indicator (SPI) on June 13, 2024 with an additional margin of Rs2, ie, Rs145.15/kg.

The cabinet committee was mandated that in case the ex-mill price rose beyond Rs140/kg or the retail price went above the benchmark SPI price as on June 13, plus Rs2, it should direct the Ministry of Industries and the Ministry of Commerce to stop sugar export.

Moreover, the cabinet committee was asked to ensure that export proceeds were utilised by sugar mills to clear the outstanding dues of growers and provinces monitor the clearance of payments.

The retail price was reported at Rs143.79/kg and Rs143.09/kg on August 22 and 29, respectively, which was lower than the benchmark.

Moreover, the ex-mill price during the corresponding period remained well below the benchmark of Rs140/kg and was reported at Rs132/kg on August 28.

Also, the ECC had allowed sugar export on advance payments. According to a report of the State Bank of Pakistan, while advance payments of $62.845 million had been received till August 23 for 103,853 metric tons of sugar, the actual shipment was 75,056 metric tons only, leaving a balance of 28,797 tons.

It indicated that there were still outstanding commitments to the foreign buyers, which needed to be met by the sugar exporters.

It was pointed out that the Punjab cane commissioner had allocated a sugar export quota on July 1, 2024 with a 45-day deadline for completing shipments in light of an ECC decision.

However, sugar export hit a major snag by August 12 due to cross-border firing and the closure of Torkham border by Afghan forces.

For that reason, the ministry sent a summary to the ECC for a 15-day extension in the deadline to allow exporters to ship the remaining consignments and use their export quotas with the recommendation that the extension should not be given to mills that did not use export proceeds for payments to growers.