ISLAMABAD: The government has clearly conveyed that permission to export 0.150 million metric tonnes of sugar will be scrapped if retail prices are increased from the benchmark of SPI of June 13, 2024 plus Rs 2 per kilogram, well-informed sources told Business Recorder.
The ECC has not approved the condition of the industries ministry which made it mandatory for the exporter that export proceeds shall be received either in advance through banking channel or within a period of 60 days of opening of L/C for export of sugar, the sources added.
The Commerce Ministry, sources said, which had refused to send summary on sugar export, has yet to issue any SRO to allow export formally.
Refined sugar export: third meeting of SAB also remains inconclusive
On June 13, 2024, Industries and Production Division briefed the forum that in continuation of two meetings of Sugar Advisory Board, 3rd meeting was held in the Ministry of Industries and Production (MoI&P), Islamabad under the chairmanship of Federal Minister for Industries and Production Rana Tanveer Hussain on June 10, 2024. The Board reviewed the data provided by Provinces and FBR regarding sugar stocks for crushing year 2023-24.
During the meetings all the stakeholders agreed that existing stocks of sugar were 4.213 million MTs as on June 05, 2024 and total consumption during last 6 months of current crushing years 2023-24 was 3.408 million MTs. It was agreed that in next 6 months, expected offtake would be same as in previous six months, ie, 3.408 million MTs. Therefore, 0.805 million MT expected surplus sugar would be available in the country at the closing of the current crushing year, ie, November 30, 2024. After detailed deliberations, Sugar Advisory Board recommended an initial export of 0.150 million MTs of surplus sugar with following conditions: (i) Pakistan Sugar Mills Association to provide an undertaking that ex-mill prices will not increase beyond Rs.140/kg. The ex-mill price as well as market price of sugar shall be monitored by the Provincial Authorities (undertaking provided by PSMA); (ii) entire export proceeds through sugar mills would be utilized for clearing payments to the farmers/growers. Provinces will monitor the clearance of payments and report to the Board; and (iii) in case of violation of any of the agreed terms, the export of sugar would immediately be stopped.
Industries and Production Division further noted that export quota of 0.150 million MT may be allocated as per past practices as approved by ECC on January 26, 2023 and as ratified by the Cabinet on January 28, 2023, ie, (a) Provincial Cane Commissioners shall allocate quota for export of sugar within seven days of the date of issuance of Notification by Ministry of Commerce as per policy already approved by the ECC;(b) exporter shall ensure that the consignment is shipped within 45 days of quota allocation; (c) export proceeds shall be received either in advance through banking channel, or within a period of 60 days of opening of LC for export of sugar;(d) State Bank shall update the ECC on export of sugar, on fortnightly basis; (e) no subsidy whatsoever shall be provided to the exporters by the Federal/Provincial Govern-ment; and (f) quota for export of sugar shall be distributed among provinces based on installed sugar cane crushing capacity of the provinces in the following manner i.e. 61 per cent Punjab, 32 per cent Sindh and 7 per cent KPK. Quota will be distributed through Cane Commissioner of the Province.
Industries and Production Division stated that the minutes of the SAB meeting were circulated and as per Rules of Business 1973 and historical practice Commerce Division was asked to move the summary for export. In response, Commerce Division refused to move the summary on the plea that last export summary was moved by Ministry of National Food Security and Research.
During the ensuing discussion, thorough deliberations were undertaken concerning the impact on retail price of sugar in the eventuality of permission to export. The matters concerning authenticity of numbers on available stock of sugar, the repercussion on sugar retail price and the mechanism to revoke export permission if the sugar prices go up, were brought up and thrashed out in detail. Industries and Production Division briefed the forum that detailed deliberations and consultation had been made with the Sugar Advisory Board through several meetings, the Provinces and other stakeholders and Industries Division had, therefore, concluded that sufficient stock was available with the Sugar Mills and in case permission to export the sugar was granted, this would not impact ex-mill sugar price.
It was emphasized that it was difficult to track down proceeds of exports which were to be utilized for clearing payments to the farmers/ growers. The forum was briefed that provincial governments were onboard to safeguard the interest of the farmers. The forum observed that their main concern was also to protect consumers and keeping the retail price at the pre-export level was essential. Another proposal was discussed to export sugar in tranches of 50,000 tons with the condition to stop export if the sugar price went up thereby revoking the export permission. In this regard assessment of reaction time for such revocation was also important and it was the responsibility of Sugar Advisory Board to take action in time. It was also briefed that past experience showed that permission to export was directly linked with sugar retail price and therefore, the same had to be evaluated carefully. It was suggested that sugar retail price benchmark may be taken from SPI as on June 13, 2024 plus Rs.2.00 and if this benchmark level was breached then SAB should immediately stop the export and revoke permission to further export sugar.
It was also emphasized that underlying principle for allowing sugar export was that the consumer should be protected from any price hike. The Minister for Power was of the view that export, per se, signaled to the market that it eventually resulted in rise in retail price. It was also mentioned that after the last year’s permission for export of sugar, retail price of sugar did rise substantially and this empirical evidence should be kept in mind.
After detailed deliberations, the ECC took the following decisions: (i) the benchmark sugar retail price per kilogram will be taken from SPI as on June 13, 2024 with the additional margin of Rs.2.00. It shall be the duty of Sugar Advisory Board to monitor sugar prices regularly, at least on weekly basis. Moreover, retail prices will also be monitored by the concerned provincial governments and the Ministry of Industries & Production shall inform them to perform this monitoring; (ii) in case the retail price of sugar rises beyond the benchmark price plus Rs.2.00 then the Sugar Advisory Board will immediately revoke permission to export; (iii) the Ministry of Industries & Production shall ensure that quota for export of sugar shall be distributed among provinces as per current year’s actual production; (iv) Provincial Cane Commissioners will allocate quota for export of sugar within 07 days of the date of issuance of Notification by MoC as per policy approved by ECC based on stocks available on June 05, 2024; and (v) the words “either” and “or” in the proposal, ie, export proceeds shall be received either in advance through banking channel, or within a period of 60 days of opening of LC for export of sugar shall stand deleted.
Copyright Business Recorder, 2024
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