Pakistan. PSMA seeks permission to export sugar

15.12.2016

Pakistan Sugar Mills Association (PSMA) has sought permission to export 0.5 million tons of sugar by March 31, 2017, with a slight hope of subsidy due to a declining trend in prices of sugar in international market, well-informed sources in Ministry of Industries and Production (MoI&P) told Business Recorder Wednesday. The Association has written a letter to Commerce Minister Engineer Khurram Dastgir Khan, copies of which have also been sent to Secretaries of Finance, MoI&P and Commerce.

The PSMA in its November 2016 letter has appreciated the commerce minister for lending support to industry by allowing export of sugar with a rebate during the last two years which had the following positive impacts: (i) payments to sugarcane growers have been cleared; (ii) area under sugarcane cultivation remained intact as a result of payments to farmers; (iii) price of sugar remained stable in the country enabling the FBR to determine assessable value of sugar at Rs 60 per kg, resultantly more revenue for the government; (iv) and foreign exchange earnings of US $132 million.

According to the Association, with the commencement of crushing season 2016-17, it foresees a production of 5.5 million tons of sugar based on 70 million tons of sugarcane. With a carryover of 1.2 million tons as on September 30, 2016, the Association expects that the total available quantity will be 6.7 million tons and after defraying consumption of almost 5 million tons in 2016-17, surpluses will be almost 1.7 million tons as on September 30, 2017.

"We request that industry be granted permission to export 500,000 tons of sugar by March 31, 2017 without export rebate as international market is currently at a level where the industry can retrieve cost of sugarcane to make payments to farmers," the sources added. However, sugar prices in the international market at present have dropped to a level where subsidy would be required.

The Association has also given assurance to the government that permission for further export would be sought after crushing season upon review of production figures. The ECC was informed recently that total reported stock of sugar in the country as on September 7, 2016, stood at 2.57 million tons and stocks would be surplus on arrival of the new crop; therefore, there was a great potential to export sugar after maintaining the strategic stocks. The ECC maintained that in case the sugar export is considered, it should not be more than 0.25 million tons in a single phase and after the said export, the ministry of commerce should again approach the ECC of the Cabinet to seek a fresh approval for the next export amount, the sources said, adding that the total proposed quantity was to be around 0.35 million tons.

Special Assistant to the Prime Minister for Revenue, Haroon Akhtar Khan, who is also a mill owner, stated that the stock positions compiled by the cane commissioners were based on the data provided by the sugar mill owners, which did not depict the correct position of the stocks. Therefore, the existing mechanism for determination of sugar stock positions made through the office of the cane commissioner is required to be reviewed. Secretary Industries and Production Division, Khizar Hayat Gondal stated that there had been some complaints regarding compilation of the data for sugar stocks; however, the office of the cane commissioner was overall effective. He further stated that he would meet the PSMA office-bearers to remove anomalies, if any, regarding data provided to the cane commissioners. However, he has not convened any such meeting to verify the data.


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