Government urged to procure additional 0.5 million tons of sugar from mills

Pakistan Sugar Mills Association (PSMA) has urged the government to procure additional 0.5 million tons of sugar from mills through Trading Corporation of Pakistan (TCP), sources close to Secretary Industries told Business Recorder, here on Thursday.
The sources said that chairman PSMA Javed Kayani held a detailed meeting with Finance Minister Dr Abdul Hafeez Shaikh on January 14, 2012 and apprised him of projections of production for the current season and sought permission for export of sugar for disposal of surplus stocks to make timely payments to sugarcane growers.
"PSMA envisages that 4.7 - 4.8 million tons of sugar is likely to be produced against a domestic consumption of about 4.2 million tons which implies surplus 500,000 - 600,000 tons of sugar," the sources maintained. In addition there is a carryover stock of 600,000 tons of sugar relating to preceding crushing crop. Therefore, sell of about 1.2 million tons of sugar in addition to domestic requirement was imperative, the sources quoted PSMA as conveying to the Finance Minister who is also the Chairman of Economic Co-ordination Committee (ECC) of the Cabinet.
TCP recently purchased about 378,000 tons of sugar thus remaining quantity of approximately 822,000 tons of sugar is to be sold in the international market as there is no opportunity for sell and disposal in the local market. According to sources, the Finance Minister reviewed the situation and suggested that permission to export be granted after the replenishment of stocks to meet the requirement of USC and reserves for market intervention.
When contacted, Kayani confirmed that he held a meeting with the Finance Minister in this regard. In reply to a question he suggested that process of procurement of sugar should continue to facilitate payments to growers amounting to Rs 250 billion during the season which can only be met through sell, disposal of surplus and availing cash finance facilities from banks.
"We have proposed that the government should issue tenders to buy 200,000 tons in January, 150,000 tons in February and 150,000 tons in March 2012 to take advantage of the lowest price of sugar at present and support the farmers," he continued. The current crushing season will come to a close in April and any surplus quantity remaining after the above procurement plan may be allowed to be exported.
"We hope that the process to build necessary inventory by TCP should be initiated forthwith as permission for export is only contingent on replenishment of strategic reserves first," he concluded. An official in the Industries Ministry told this scribe that the Ministry is expected to request for relaxation of PPRA rules 2004, in case the government clears the proposal floated by the PSMA.