Saturday February 04, 2023

Govt to maintain strategic reserves with surplus sugar stock

November 29, 2022

LAHORE: The federal government has decided to maintain strategic reserves of sugar out of surplus stock with a view to providing cushion against any gap between demand and supply, it is learnt on Monday.

On the other hand, the Sugar Advisory Board (SAB) has been given the task to assess the stock position in its meeting scheduled to be held today (Tuesday). The participants in the meeting will review production data submitted by mills from the previous season and findings of the track and trace system introduced by the Federal Board of Revenue as a part of a stocktaking exercise.

Following recommendation of SAB, the Economic Coordination Committee of the Cabinet (ECC) may take decision on export of the commodity. It seems the government has not yet made its mind on granting permission for sugar export. After holding a crucial meeting on Monday to review the demand and supply situation of sugar in the country, there has been no word by authorities over permission to allow export of sugar, which has been a lingering issue and a key demand raised by the manufacturers. Sources said the major reason behind no decision about export of sugar had been a low output of sugarcane in Sindh province in the wake of devastating floods.

During a meeting in the federal capital, Federal Minister for Finance and Revenue Ishaq Dar expressed satisfaction on the availability and production of sugar in the country. He stressed maintaining the strategic reserves of sugar and maintenance of prices for providing maximum relief to people. Reacting to the government’s decision about maintaining strategic reserves, Ch. Zaka Ashraf, Chairman Pakistan Sugar Mills Association (PSMA), Punjab Zone, said there was no need to take the step right in the middle of the sugarcane crushing season when ample sugar was being produced while a sizeable surplus stock from the previous crop was already in warehouses.

If the government wants to maintain strategic reserves of sugar, he observed, the step will only be a viable option before the start of the next crushing season in 2023, provided there is any gap in demand and supply in the ensuing period. He reiterated the demand of allowing sugar export, saying the millers had to face huge losses due to glut in the market and high costs of sugarcane.

The Monday’s meeting, which was also attended by Federal Minister for National Food Security and Research Tariq Bashir Cheema, reviewed the available stock position and future demand of sugar in the country and was apprised that sufficient stocks are available in the country. It was informed that sugar mills had started crushing sugarcane in Sindh and Punjab provinces. It was also informed that production of sugar in the province of Sindh would be less than the last year due to floods.

Commenting on the evolving sugar availability situation, sources are of the view that Pakistan has less than two months stocks from the previous crop. With six lakh tons monthly consumption, 1.07 million tons surplus sugar from the previous crop is sufficient to meet hardly 54 days’ requirements. Out of this stock, if 0.5 million tons of sugar is kept as strategic reserves coupled with 0.25 million tons in the supply chain, only about 0.25 million tons could be available for export, claimed sources.

In such a situation, the government should consider a proposal to allow one lakh tons sugar export on a monthly basis but with a strict regulatory mechanism. After carefully reviewing the demand and supply position periodically, export could continue until 0.25 million tons of sugar is traded internationally.