Government to import 0.1 million tons of more expensive sugar

The government has reportedly decided to import 0.1 million tons of relatively more expensive sugar on the basis of unverified statistics presented during a meeting of the Economic Co-ordination Committee (ECC) of the Cabinet, sources told Business Recorder.
The Ministry of Industry, initially had sought permission to import 0.4 million tons of sugar but a document presented in the ECC meeting on October 13, 2011 justified an additional 0.3 million tons of sugar for the Utility Stores Corporation (USC).
Sources in the Ministry of Industries accused what they referred to as those in a hurry to make money for floating unverified documents justifying the need to import the additional 0.3 million tons. This move was opposed by Pakistan Sugar Mills Association (PSMA) strongly suggesting that TCP should buy sugar from the local industry, instead of resorting to import.
"I have written a letter to Secretary Finance Dr Waqar Masood apprising him about availability of sugar stocks and forecast for the next crushing season," said PSMA Chairman Javed Kayani on telephone from Lahore.
When contacted, Secretary Finance said that the government has not yet decided to import sugar for next year. "We have allowed only USC to import 0.1 million tons of sugar after one month. We are holding a meeting on sugar issues within a couple of days after which we will be able to reach an informed decision," Waqar said.
MoI sources further said that USC is not interested in importing sugar as this is TCP''s business and not USC''s. In the past, USC has always shown reluctance to import or purchase sugar from local mills to avoid controversies. However, this time, the Corporation is under pressure from some influential policy makers to import sugar, directly.
PSMA in its letter to Secretary Finance expressed grave concern on the GoP decision to import sugar which "will grossly impact on the crushing season" in view of the existing stocks which are sufficient until 15th December and hope that crushing season2011-12 will commence in November 2011.
"We are also expecting to produce about 4.8 to 5 million tons of sugar in the forthcoming crushing season which is likely to be surplus by 600,000 to 800,000 tons than our anticipated consumption of about 4.2 million tons," Kayani said.
PSMA, he added, "will approach GoP to seek permission for export of surplus sugar at the end of crushing season".
"We strongly feel that there is no shortage of sugar in the country which is available to consumers at a reasonable price. The proposed import of sugar at around $725 C&F Karachi along with other allied costs etc would cost around Rs.74 per kg (landed)," he added.
According to TCP, sugar policy envisages maintaining of strategic reserves for market intervention. Imports during 2010 enabled the government to intervene in the market in an effective manner by providing sugar to USC, provinces and also sale through open tender. The balance of this imported sugar met the requirement of USC for the whole year 2011. However, at the end of the year, the current stocks will exhaust and the government will have no strategic reserves for next year or for any unforeseen requirement for market intervention.
"We have suggested that TCP should immediately issue a tender to purchase 100,000 - 150,000 tons of sugar from industry to maintain strategic reserves, which would be payable in rupees and not in dollars, and would enable the industry to start crushing on time, without waiting to exhaust the present stocks thereby supporting the growers who have suffered devastation during the recent rains/floods," Kayani said.
He said that sugar industry can offer to sell at lower than the landed cost thereby saving the country''s scarce foreign exchange resources.