Lifting of ban on export: Industries ministry opposes sugar mills' demand

ZAHEER ABBASI

ISLAMABAD: The Ministry of Industries has reportedly opposed the demand of sugar mills to lift ban on exports of sugar owing to forecast of lean production in 2013 which may compel the country to import the commodity at relatively higher price, it is learnt. Official documents available with Business Recorder revealed that the Ministry of Industries in a summary submitted to the Economic Coordination Committee (ECC) in review update on sugar situation as well as purchase from the domestic sugar mills, stated that allowing exports of sugar may not be feasible as per cropping patterns forecast in 2013. The ECC was also informed that sugar mills have been pressing hard to lift ban on export of sugar.

The ECC was informed that a bumper sugarcane crop is expected to yield record sugar production of 4.8 to 5.0 million tons while annual consumption during last three consecutive years has been to the tune of around 3.8 million tons. The meeting was informed that the opening stocks of sugar were more than 0.5 million tons thus a surplus of about 1.3 to 1.7 million tons is anticipated and sugar mills are pressing hard to lift ban on export of sugar as it is facing severe liquidity issues.

The meeting was further informed that at the start of crushing season 2011-12, according to the State Bank of Pakistan (SBP) report, mills have pledged stocks with banks against loan of more than Rs4.5 billion for the crushing season 2010-11. Farmers are complaining that mills are not in a position to clear all payments during the crushing season.

The ECC was told that the government maintains strategic reserves of 0.5 million tons as per National Sugar Policy 2009 to ensure sugar availability and price stability and to make monthly USC interventions, including Ramazan package of 0.6 million tons annually.

The Ministry of Industries told the ECC that after deducting TCP old stocks of around 0.1 million, the country requires further domestic purchase of 1.0 million tons. Since 0.378 million tons stand procured from domestic market a further 0.622 million tons is still required.

On the request of the Ministry of Industries, the ECC reportedly fixed Rs50 per kg as maximum benchmark to purchase 100,000 tons sugar from the local mills. The ministry also proposed facilitating the growers, industry and common man by purchasing 0.622 million tons of sugar, in addition to 0.378 million tons from domestic producers by Trading Corporation of Pakistan (TCP). The meeting directed that all sugar mills may be given the opportunity to participate in the tender.