The Commerce Ministry has decided to restrict export of 0.1 million tons of sugar on "E" form aimed at monitoring of export by the State Bank of Pakistan (SBP), official sources told Business Recorder.
The sources said Ministry of Commerce had recommended to the Economic Co-ordination Committee (ECC) of the Cabinet to allow export of 0.2 million tons of sugar, but the latter restricted it to only 0.1 million tons, fearing that massive export could be instrumental in increasing sugar prices in local market.
"As there is reported surplus of sugar and the mills are facing liquidity problem, the ECC, on a summary moved by the Ministry of Industries with the objective of improving the liquidity of mills, has allowed export of a total 100,000 tons and placed export quota restriction of 7,000 tons per mill," the sources added.
Apparently only mills can export sugar independently and SBP has been mandated to monitor the export. According to the Commerce Ministry, the export of sugar remains restricted both in terms of quantity and class of exporters. The sources said Commerce Ministry had decided not to amend the Export Policy Order and instead a public notice would be issued announcing the decision and restricting exports only against "e" form so that export could be monitored by the SBP.
According to the documents, the ECC was informed that due to likely bumper sugarcane crop, it is expected that sugar production would be 4.8 to five million tons, while average annual consumption during the last three years was 3.8 million tons. Thus, a surplus of about 1.3 to 1.7 million tons is anticipated. Due to anticipated surplus, the sugar mills pressed the government to lift ban on export of sugar as they are facing severe liquidity issues.
According to SBP, at the start of crushing season 2011-12, sugar mills have pledged stocks with banks against loan of more than Rs 4.5 billion for the crushing season 2010-11. Consequently, farmers are complaining that mills are not in a position to clear all payments during the crushing season.
It was also stated that in accordance with National Sugar Policy 2008, the government is required to maintain strategic reserve of 0.5 million tons to ensure sugar availability and price stability and to make monthly USC interventions, and 6 million tons for this month.
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