Differences have emerged between the Ministry of Industries and Production (MoI&P) and Pakistan Sugar Mills Association (PSMA) over sugar production figures for the current year. According to the MoI&P, sugar production in 2010-11 has been estimated at 3.47 million tons whereas PSMA is projecting 3.8 million tons against consumption estimates of 4.2 million tons.
Official documents obtained from the MoI&P reveal that the ECC in its meeting on January 13, 2011 directed the Ministry of Industries and Production to review the imported sugar stocks' position at the earliest and devise a mechanism for its disposal and bring it before ECC in its next meeting for appropriate decision.
According to the documents, domestic sugar production figures as on January 22, 2011 stand at 12,83,922 tons. While the total domestic stocks including 16,482 tons old stocks are 13, 00,404 tons. From this quantity an off take of 4,84,054 tons has taken place leaving balance stocks of 8,16,350 tons. The total sugar imported by TCP for 2009-10 is 11, 00,000 tons; out of this 10, 80,618 tons stand arrived and 19,382 tons is in the pipeline. The balance sugar stocks with TCP on January 18, 2011 were 4,39,547 tons.
This balance of imported sugar includes, 1, 34,424 tons yet to be lifted by provinces of the 300,000 tons allocated to them (Ramadan 100,000 tons and the November 2010 allocation of 200,000 tons by Council of Common Interests (CCI)).
The MoI&P maintains that the actual available quantity of imported sugar for disposal with TCP is 305,123 tons. The monthly sugar sale of USC is 40,000 to 50,000 tons. Thus imported sugar stocks balance with TCP will be sufficient for seven months intervention by USC including Ramadan 2011 intervention of 60,000 to 80,000 tons. The ECC, in its meeting on September 21, 2010 while ousting TCP from sugar import business had decided that sugar imports henceforth will be through the private sector.
According to the State Bank of Pakistan (SBP) report of January 10, 2011, Letter of Credits (LCs) for 1, 53,344 tons has been opened of which 83,124 tons is white sugar while 70,220 tons is raw. Of this entire quantity imported by private sector 106,000 tons stand arrived ie white 61,000 tons and raw 45,000 tons.
The MoI&P further stated that sugar production in 2010-11 season has been estimated at 3.46 million tons leaving a gap of approximately 0.8 million tons between production and projected consumption of 4.25 million tons. The ministerial committee in its meeting of November 11, 2010 also decided that 0.7 million tons of strategic reserves would be built.
When contacted, Chairman PSMA Javed Kayani on the proposed plan of the GoP to import 700,000 tons of sugar to meet any likely shortages, opined that the first and foremost priority was to ensure availability of sugar at a reasonable rate to the consumers of this country and maintained that he was not averse to the idea of imports but the crushing season was going on in full swing and "we have almost produced two million tons of sugar while February and March period crushing is still to come".
Kayani said GoP should only consider import as a stop gap arrangement only after the crushing season is over and production figures are arrived at. He also said international market is already at the highest level and FOB price is around USD 800 primarily due to floods in Australia and Brazil. The market might come down in future months once the disrupted supply begins from these two sources and that would be the most appropriate time to consider building up of inventories if needed.
"There is apparently no imminent shortage as production and TCP carry over can easily suffice the domestic requirement," he added. He proposed a meeting of the stakeholders be convened after the crushing season to evaluate the situation to take any steps needed. According to him during February and March sugarcane crop matures and this was the time one can expect higher production with better recovery.
A meeting of the ministerial committee regarding sugar notified by the Cabinet Division in July last year is being convened shortly. This meeting will monitor the private sector sugar import in 2010-11 till date and also finalise a modus operandi to build strategic reserves of 7 lac tons to ensure sufficient stocks are available for market interventions for sugar availability and price stability.
The recommendations of this meeting will be presented to the ECC thereafter. The MoI&P has proposed that TCP left over imported stocks of 3,05,123 tons and the 19,382 tons in pipeline may be allocated for USC interventions from February 2011 to middle of August 2011 including Ramadan.
The Ministry has further proposed that in case the provincial governments do not lift the remaining 1,34,424 tons sugar by January 31, 2011 this quantity may also be included in the USC allocation taking care of another three months of USC sugar requirement till the end of November 2011. The rationale being that these interventions meant for Ramadan 2010 and November 2010 are superfluous now that the new sugar has arrived.
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