Minister ousted from sugar body

ECC proposes Dar as new chair to oversee sugar exports, price control

ISLAMABAD:

In a major reshuffle, the Petroleum Division is set to be removed from the sugar price control committee following disagreements over the revocation of sugar export quotas. This decision comes after Petroleum Minister Musadik Malik, who had been leading the price control committee, recommended halting sugar exports due to violations of conditions set by the Economic Coordination Committee (ECC).

The petroleum minister has been vocal in his criticism of sugar millers for violating the export conditions imposed by the government. He had recommended revoking the sugar export quota after observing that sugar millers had failed to adhere to the terms set by the ECC.

In a recent development, however, the ECC, during its latest meeting, suggested to the federal cabinet that the petroleum minister be replaced as the head of the price control committee. It recommended that Foreign Minister and Deputy Prime Minister Ishaq Dar be appointed as the new chairman of the committee.

According to a report submitted to the cabinet, the retail price of sugar had exceeded the government's set benchmark, necessitating a halt in sugar exports. However, the Ministry of Industries continued to support sugar millers in selling sugar in international markets. The report also revealed that some sugar mills had failed to pay growers from their export proceeds, further violating government conditions.

The ECC had initially allowed sugar exports by linking them to a specific price benchmark, with the provision that exports would be stopped if the retail price exceeded this threshold. A report from the Cabinet Committee on Monitoring Sugar Exports confirmed that the retail price had surpassed the set benchmark, prompting the petroleum minister to call for halting exports during a meeting of the monitoring committee. However, the industries minister opposed this move, and sugar exports continued.

The cabinet committee held meetings on July 29 and August 1, 2024, to discuss sugar's ex-mill and retail prices, as well as payments to growers. During the second meeting, the petroleum minister reiterated his stance that export quotas should be revoked. However, the industries minister disagreed, arguing that the retail price was stable and that only the export quotas of mills that had failed to make payments to growers should be abolished, rather than penalising the entire sugar industry.

While approving the export of an additional 0.5 million tonnes of sugar, the ECC directed that the Cabinet Committee on Monitoring Sugar Exports continue to monitor and update the Cabinet regularly on the demand, supply, and price estimation of sugar in the country, particularly in relation to the export of 0.5 million metric tonnes of sugar on a fortnightly basis. The ECC further recommended that the federal cabinet appoint Foreign Minister Ishaq Dar as the chairman of the Sugar Monitoring Committee, replacing the petroleum minister.

The ECC also instructed the Industries and Production Division to brief the committee on the entire export process, from the approval of the ECC to the final shipment of sugar. The Industries and Production Division informed the economic decision-making body that a meeting of the Sugar Advisory Board (SAB) was held on October 8, 2024, under the chairmanship of the federal minister for industries and production.

During the SAB meeting, data from the Provincial Cane Commissioners, the Federal Board of Revenue (FBR), and the Pakistan Sugar Mills Association (PSMA) regarding sugar stocks for the 2023-24 crushing year was reviewed. It was agreed that as of September 30, 2024, the existing sugar stock stood at 2.054 million metric tonnes, while total consumption over the last ten months was 5.456 million metric tonnes, excluding exports.

The SAB also projected that in the next two months, the expected off-take would be approximately 0.9 million metric tonnes, based on actual quantities lifted in September, reported by the FBR as 0.45 million metric tonnes. After accounting for this off-take and the already permitted export of 0.14 million metric tonnes, the remaining stock was likely to be 1.014 million metric tonnes by November 30, 2024.

Furthermore, after earmarking 0.45 million metric tonnes as a strategic reserve for one month's off-take, a surplus of 0.564 million metric tonnes would remain available. The PSMA has assured that if sugarcane crushing begins by the third week of November, an additional export of 0.5 million metric tonnes would be feasible. Consequently, the SAB recommended the export of 0.5 million metric tonnes of sugar.