Sugar likely to dominate CCI proceedings

The Council of Common Interests (CCI) which is scheduled to meet on Friday (today) with Prime Minister Shahid Khaqan Abbasi in the chair will deliberate on sugar policy and sugar export after sugar mill owners refused to start crushing without reasonable revision in export rebate, well informed sources in Commerce Ministry told Business Recorder.
PSMA delegation, sources said, met Prime Minister on November 21, 2017 and apprised him about a current sugarcane crop, expected production in 2017, current carryover stock and pricing trend in international market besides seeking increase in the amount of rebate to Rs 20 per kg from Rs 10.70 per kg recommended by an inter-ministerial committee headed by Commerce Minister. However, in a subsequent meeting, Secretary Commerce Younus Dagha refused to revise the amount of export rebate which has created a deadlock between millers and the federal government.
Keeping in view the current situation, Commerce Ministry has decided to take up this issue at the CCI level which will be duly represented by all provincial Chief Ministers for an informed decision, the sources added. "We have received a letter from PSMA in which the Association has demanded a reasonable revision in export rebate," the sources continued.
PSMA, the sources said , in its letter has claimed that a meeting of Sugar Advisory Board (SAB) held on October 27, 2017 under the chairmanship of Secretary Industries and Production was convened to ascertain exportable surplus of sugar and the amount of rebate necessary to facilitate payments to sugarcane growers. It was pointed out during the meeting by Chairman PSMA Javed Kayani that while working out a rebate of Rs 10.70 per kg given to export previous tranche of 0.5 million tons, PSMA was neither engaged nor taken on board.
PSMA requested for revision of export rebate amount to bridge the deficit between the international market price of sugar which is currently at $ 325 per ton and the domestic cost of production of Rs 63 per kg based on Rs 180/40 kg support price of sugarcane. "We have submitted to SAB that export rebate of Rs 20 per kg may be given to ensure and facilitate payments to sugarcane growers as with the carry-over stock of 500,000 tons and foreseeable surplus of 8 million tons in the ensuing crushing season, we will be left with a surplus of 3 million tons after defraying the domestic consumption of 5.5 million tons," he added.
According to PSMA, there is a glut in the international market which makes it difficult to sell given their cost of production and at a time when other competitors are vigorously trying to off-load their surplus; therefore there is a need for a reasonable export rebate to compete and cover the cost of production.
"We apprised Prime Minister on November 21 to intervene and salvage the situation by allowing a quantum of 1.5 million tons so that crushing season may commence as stipulated under the Sugarcane Act of 1950," sources stated. Commerce Division has already sent a summary to the Economic Coordination Committee (ECC) of the Cabinet to increase sugar export quantity to 1.5 million tons from 0.5 million tons with an export rebate of Rs 10.70 per kg.