ISLAMABAD: The federal government is to purchase 0.3 million tons of sugar for strategic reserves from sugar mills, summary of which has not been shared with the minister for Industries and Production due to conflict of interest, sources close to Secretary Industries told Business Recorder.
In addition, Punjab and Sindh will also purchase 0.2 million tons of sugar from mills for building strategic reserves.
Sharing the details, sources said, National Price Monitoring Committee (NPMC) in its meeting held on December 15, 2021 and December 22, 2021 directed the Ministry of Industries and Production to build strategic reserves of sugar to avoid price variation/hike in future by procurement from local producers at the most suitable rates.
Sugar Advisory Board (SAB) meeting was conducted on December 29, 2021 to review sugar produced and estimates of sugar produced during this crushing year.
Agriculture Policy Institute (API) under MNFS&R noted that due to bumper crop of sugarcane, it is anticipated that sugar output of around 7.04 million tons will be available during this crushing year i.e. 2021-2022. This corroborated well with estimation of cane commissioners of the provinces whose estimates hover around 6.353 million tons for this crushing year.
Keeping in view the uncertainty of consumption pattern of sugar, it was decided in the SAB meeting held on December 29, 2021, to increase the estimates of annual consumption of sugar from 5.80 million metric tons (as was determined in the SAB meeting held in December 2020) to 6.30 million tons for this crushing season). It was also decided that reserve stocks of sugar may be maintained by the government by purchasing sugar in a phased manner from local sources instead of lifting the entire quantity in lump sum and escalating local prices.
This will additionally help the government to avoid import of sugar at expensive rates from the international markets.
After explaining the background, the MoI&P has prepared a summary for the ECC, in which it proposed that up to 0.300 million metric ton sugar (equivalent to two month household consumption) should be purchased by the federal government whereas provincial governments of Punjab/Sindh may be advised to purchase 0.200 million metric tons of sugar for strategic reserves from sugar mills in the current bumper crop year.
Further the local purchase may be done when prices are lower in the local market (i.e. February 2022 till June 2022). The purchase of sugar may be made in phased manner so as not to interfere with the market forces.
The MoI&P has proposed that sugar may be purchased in the following manner by federal government: (i) up to 0.150 million metric tons (granular sugar used by domestic consumers as per PSQC standards) to be purchased by PASSCO and up to 0.15 million metric tons to be purchased by TCP; (ii) sugar purchased from local sources by PASSCO and TCP will be kept in Government owned warehouses of these organizations; (iii) The purchased/stored sugar will be released as per terms and conditions on the directions of ECC/Cabinet; (iv) the purchase of up to 0.300 million metric tons of sugar will be financed by Finance Division and purchase of sugar will be done through standard procedure of commodity financing; and (v) similar advisory may be issued to the Punjab and Sindh by Ministry of Industries and Production.
The sources said both PASSCO (National Food Security and Research), and (TCP) Commerce Division are reluctant to store sugar in their respective stores/warehouses.
The MoI&P has also claimed that due to conflict of interest the Federal Minister for Industries and Production, Khusro Bakhtyar has not seen the summary. Therefore, being a policy matter secretary (I&P) has submitted this summary before the ECC.
The ECC of the Cabinet, which is scheduled to meet on Thursday (today) with finance minister in the chair, will consider the proposal of MoI&P.
Copyright Business Recorder, 2022