Govt rejects sugar export request

ISLAMABAD: The government on Thursday rebuffed the Pakistan Sugar Mills Association’s (PSMA) plea to authorize exports of refined sugar, emphasizing the importance of addressing domestic demand as a priority. The decision, contingent upon a comprehensive evaluation of current stock levels, was deferred pending further review. A final verdict has been postponed until a subsequent meeting following Eid.

The Sugar Advisory Board (SAB), a tripartite body comprising representatives from federal and provincial governments and the sugar industry, met on Thursday with Federal Minister for Industries and Production Rana Tanveer Hussain in the chair. Hussain also holds the portfolio of the Ministry of National Food Security and Research.

The meeting reviewed the sugar stock position, and officials informed the meeting that the total sugar production for the current year stood at 6.752 metric tons.

The sugar millers, who have political and bureaucratic influence, have been lobbying to allow them exports. This year, the industry demands up to 1 million of sweetener exports. Notably, almost every year, they get permission to export hundreds of thousands of tons, and soon the local prices go up. Now, the minister has made it clear that “we will first confirm the local stocks, then we can take any decision”.

He emphasized that rise in sugar prices directly affects the general populace. Prioritizing meeting the local sugar demand was deemed essential before considering exports, especially considering Pakistan’s competitive sugar pricing in the region. Ensuring an uninterrupted sugar supply was underscored.

Representatives from the Pakistan Sugar Mills Association (PSMA) highlighted expectations of a substantial sugarcane crop in the upcoming season, attributing it to favourable rates provided to farmers this season. They proposed exporting surplus stock, with a decision deferred to the next meeting pending a thorough assessment of available stock, local consumption trends and surplus balance.

The Ministry of Industries and Production was tasked with presenting a comprehensive report in the subsequent meeting, scheduled promptly after Eidul Fitr. The government relies solely on the stock figures provided by sugar mills and has no access to audit the stocks before deciding on exports. In the absence of an audit mechanism, the government normally gets tricked and the general public bears the brunt in the form of high prices.

Notably, in November 2023 before the start of the new crushing season, the millers had asked for permission to export 500,000 tons, but the caretaker government disallowed and restricted the exports to avoid potential shortages and price hikes in the domestic market. Then caretaker Commerce minister Gohar Ejaz, said: “We will not allow the export of sugar till the full production and consumption are assessed at the end of the season.”

It is also worth-mentioning that before that, the coalition government of Pakistan Democratic Movement (PDM) had allowed the export of nearly a million tons of sugar, which led to a surge in domestic prices. Despite the government’s condition that retail sugar prices should not exceed Rs100 per kg, prices initially remained within the range but later soared to a record high of Rs200 per kg in August, prompting the government to ban exports from August 10, 2023. The current retail price of the white sugar is Rs155/kg.

The sugar millers, who have been lobbying for export permissions to benefit from government subsidies and higher local prices, have been accused of inflating their stocks and smuggling sugar to neighbouring Afghanistan, which has contributed to higher prices in the domestic market.

The lack of an audit mechanism has also exposed the government to manipulation by the millers who have been accused of price fixing, fake exports and money laundering in a 2020 Sugar Inquiry Committee report.

The report, pointing to sugar price fixing, fake exports and potential money laundering, underscores the need for transparency and accountability in the sugar industry. The government has been urged to implement measures, including an audit mechanism, to ensure accurate and transparent stock figures, thus preventing price fixing and corruption in the industry.