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Monday May 20, 2024

Govt again postpones sugar export decision to meet domestic demand

PSMA has escalated its lobbying efforts to sway the government into permitting the export of refined sugar

By Israr Khan
April 18, 2024
A representational image showing  workers preparing sugar bags  at a warehouse in Islamabad. — AFP/File
A representational image showing  workers preparing sugar bags  at a warehouse in Islamabad. — AFP/File

ISLAMABAD: The government has again postponed the decision on the Pakistan Sugar Mills Association’s (PSMA) request to permit exports of refined sugar, underlining the imperative of prioritising domestic demand.

The decision, subject to a thorough assessment of existing stock levels, has been postponed pending further deliberation.

Senior officials from relevant ministries disclosed to ‘The News’ on Wednesday that the PSMA has escalated its lobbying efforts to sway the government into permitting the export of refined sugar, leveraging its political connections to influence a favourable decision.

The Sugar Advisory Board (SAB), a federal tripartite recommendation body, on Wednesday, refrained from deciding on sugar exports, opting instead to await the final report on current stocks and local demand from the cane commissioners.

The officials cautioned that sugar, now a politically sensitive issue, warrants meticulous consideration from the government.

The board, comprising members from the federal government, provincial governments, and sugar industry/ growers/ associations, convened with Federal Minister for Industries and Production Rana Tanveer Hussain chairing the session to deliberate on actual sugar stocks in the country, expected sugar production, exports, and industry concerns.

Also present were Federal Minister for Commerce Jam Kamal Khan and federal Secretary for Industries and Production Waseem Ajmal Chaudhry, alongside high-ranking federal government officials, provincial representatives, and PSMA members.

It should be noted that sugar millers have been lobbying for the last few months to seek permission from the government to export sugar, despite there being doubt about the volume of the available stocks reported to the government.

An earlier meeting held this month addressed the same agenda, primarily focusing on sugar export permissions. However, the final decision had been postponed until the Wednesday meeting. At the prior session, the officials disclosed that total sugar production for the current year amounts to 6.752 metric tonnes, yet uncertainties persist regarding production, stocks, and surplus quantities, prompting a deferral of the decision to the next forum.

In the preceding fiscal year (FY23), the total yield was 6.6 million tonnes, while FY22 witnessed a total production of 7.5 million tonnes. This year, the industry demands for up to one million tonnes of sweetener exports.

The meeting’s aim was to evaluate the comprehensive stock status of sugar for the 2023-24 crushing season and to review the PSMA’s proposal regarding surplus sugar reserve exports after satisfying domestic consumption needs. However, the decision remains contingent upon a thorough assessment of current stock levels and is deferred pending further scrutiny.

Minister Hussain emphasised the direct impact of sugar price fluctuations on consumers and advocated prioritising local demand fulfillment. To achieve this, it was suggested to synchronise export decisions with maintaining price stability in the local market. Consequently, the government and PSMA would collaborate to devise a mechanism ensuring price stability before exporting surplus stock.

Moreover, the provinces and PSMA pledged to ensure uninterrupted domestic supply, guaranteeing price stability until the commencement of the next crushing season. A unanimous agreement was reached to compile authenticated data on available sugar stocks, including projected sugar production from beet, and to seek recommendations from provinces before finalising export decisions.

The sugar advisory board committed to conducting a thorough review of the data in subsequent meetings, acknowledging the potential adverse effects of sugar exports on domestic prices and food inflation, particularly among low-income demographics.

Notably, the Pakistan Democratic Movement (PDM) coalition government previously sanctioned the export of nearly a million tonnes of sugar, resulting in a surge in domestic prices. Despite the government’s stipulation that retail sugar prices should not surpass Rs100 per kg, prices initially complied but later skyrocketed to a historic high of Rs200 per kg in August, 2023. Consequently, on August 10 the government imposed a ban on sugar exports. It is important to note that at the time of the government’s decision, the millers had given surety that they would not let the price go beyond Rs100/kg.