The federal cabinet is likely to allow import of refined/white sugar for the next season, contrary to the wishes of sugar mill owners, as raw sugar will become costlier than the refined product, it is reliably learnt.
Sugar policy is scheduled to be discussed by the federal cabinet in its next meeting, probably sometime this week. There are indications that some of the top government policy makers will oppose the import of refined sugar at the behest of sugar mill owners, said one of the officials on the request of anonymity.
According to official documents, on April 29, 2009, the Ministry of Food and Agriculture (Minfa) had forecast a shortfall of 800,000 MT sugar for the 2008-09 season. Until now, 225,000 MT white sugar has been imported by the Trading Corporation of Pakistan (TCP).
The report of Khalid Aziz Mirza, Chairman of the Competition Commission of Pakistan (CCP) has confirmed that the TCP did not have enough reserves of sugar to be released into the market to bring sugar price down. According to sources Pakistan''s new sugarcane crop to be harvested in November/December 2009 is expected to miss the target by 13. 98 per cent set by the Federal Committee on Agriculture (FCA) in its meeting in April 2009. The committee is headed by Minister for Food and Agriculture Nazar Muhamamd Gondal.
Worried about the current sugar situation, Punjab Chief Minister Shahbaz Sharif wrote to Prime Minister Yousuf Raza Gilani, saying that the expected shortfall in sugar production is going to be around 1-1.4 million MT. However analysts are predicting a higher shortfall due to smuggling of sugar to neighbouring countries especially Afghanistan where sugar is being sent as Gur (raw sugar).
However the main question is that who has reliable sugar data. Minfa''s Additional Secretary Shahid Hussain Raja, during an ECC meeting had said sugar mill owners are ''liars''; Deputy Chairman Planning Commission Sardar Asif termed them ''East India Company'', but relevant ministries rely on the data provided by the Pakistan Sugar Mills Association (PSMA).
"All the relevant ministries and government departments have relied on divergent and misleading data from PSMA which has not been independently verified and cannot be relied upon," commented one of the sugar sector analysts. Independent cost analysis suggests that if the difference in price between raw and refined sugar imports is $150/MT on Cost & Freight (C&F) Karachi basis only then it is economically feasible to import raw sugar. Currently, this difference is $60-65/MT in the international market, therefore, refined/white sugar imports are a more cost effective and better option to meet Pakistan''s sugar deficit. The operational performance of every sugar mill is different as some mills are more inefficient than others and not strategically located at or near sea ports. These mills are also not specialised in the conversion of raw sugar into refined sugar.
Raw sugar itself is "unfit for human consumption" and as per PS 4796-2002 (Pakistan Standard for Raw sugar) only raw sugar of min 2000 ICUMSA can be imported versus max 60 ICUMSA for Refined Sugar and Max 80 ICUMSA for White Sugar (PS 1822-2007). This will entail higher conversion costs to comply with current PSQCA standards. The sources said the cabinet is expected to direct the Commerce Ministry to hold strategic reserves/stocks covering at least 3 months of consumption at 300,000 MT per month at all times for immediate intervention.
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