Govt body proposes sugar export of 1.5mln tonnes

LAHORE: Sugar Advisory Board (SAB), an inter-provincial body, proposed the government to allow sugar export of 1.5 million tonnes as sweetener surplus may pile up to three million tonnes by the end of the current crushing season, official papers revealed on Thursday.

The board, comprising of officials of ministry of production and industry, would also recommend the Trading Corporation of Pakistan to purchase another 1.5 million tonnes of sugar through tender process in the upcoming Inter-Ministerial committee meeting, the documents, available with The News, showed.

The Sugar Advisory Board, in a meeting, agreed with the sugar stocks figures presented by Pakistan Sugar Mills Association (PSMA), according to the documents. Pakistan Sugar Mills Association is expecting the highest ever sugar production of seven million tonnes in the crushing year of 2016/17, and projected the output at eight million tonnes for the next crushing year.

Local demand is around 5.1 million tonnes, while there is also surplus sugar of over 1.2 million tonnes. Officials of ministry of commerce told the meeting participants that the ministry would also endorse the board’s proposals if all its members throw weight behind the proposal.

Shoukat Ali, secretary food Punjab, also supported the export proposal. Ali said more sugar is expected in the current sugarcane crushing year as "the area under sugarcane cultivation was 1.95 million acres last year, which increased to 2.13 million acres".

He added that the provincial government is likely to face two issues due to increase in sugar production. Firstly, sugarcane crop is ready for crushing and secondly the payments of the sugarcane growers will be delayed during the next year, if export of surplus sugar is not decided forthwith.

Mills usually start crushing in October, but this year crushing was a little delayed as they lack the funds to settle bills for cane purchases before the new season. Agha Zaheeruddin, cane commissioner of Sindh, said the area under sugarcane cultivation in the province is increasing 25,000 acres a year, whereas the area under cotton cultivation is decreasing.

Sindh government called for 1.8 million tonnes in sugar exports with rebate of Rs18/kg of 50-50 percent sharing formula by the federal government and provincial governments. Pakistan Sugar Mills Association advised the government to make arrangements with Chinese counterparts to export sugar to China, which is purchasing sugar from global markets.

Industry officials said the government needs to revisit the mechanism of export subsidy. Currently, the government offers Rs10.7 per kilogramme as subsidy. The officials said the rate is not feasible. Earlier the subsidy was Rs13/kilogramme.

Sugar Advisory Board is now mandated to take up the subsidy issue. The sugar industry urged the government to revise up export subsidies as a steep fall in global sugar prices slowed shipments.

“The country last had an export subsidy in 2015/16, set at 13,000 rupees ($124) per tonne for exports of 650,000 tonnes of the sweetener, and a similar subsidy level is needed again,”a statement from the association said earlier.