Release of inland subsidy on sugar export: PSMA resents government decision to impose ban

Pakistan Sugar Mills Association (PSMA) has strongly reacted to the caretaker Commerce Minister's decision to impose ban on release of inland subsidy on sugar export. In a letter to the caretaker Prime Minister, Mir Hazar Khan Khoso, former Chairman PSMA, Iskander M Khan has requested to review the latest decision, saying that in case of withdrawal subsidy sugar industry will not be able to export 1.2 million tons of sugar.
A copy of the letter has also been sent to the caretaker Minister for Commerce and Textile Industry and Commerce Secretary. PSMA is of the view that the ECC of the Cabinet had approved inland subsidy @Rs 1.75/kg to facilitate export of sugar on fast track basis to enable the sugar mills to off load their surplus inventories and pay the grower's dues. However, it has been learnt through newspaper that the government has withdrawn the facility considering it to be politically motivated.
In this regards, PSMA has submitted again that during 2012-13 Pakistan had bumper sugarcane crop of about 62 million tons having estimated sugar output of 4.7-4.8 million tons. The carry forward stocks from the last year are about 1.4 million tons, this makes a total availability of more than 6 million tons of sugar against the domestic requirement of about 4.2-4.4 million tons. Due to this, the government allowed export of sugar for two main reasons, one to off load the surplus inventories and second to improve liquidity of the mills to pay off grower's dues.
Iskander further said that the export of sugar was allowed from January 2012, however, it could not take place at the required pace due to the declining price trend in the international market coupled with higher cost of sugar production because of 25 percent increase in the sugarcane support price in Pakistan. The government then constituted a committee headed by Special Assistant to the Prime Minister to encourage export and to come up with a mechanism for timely export of sugar, even then, the export could not take place due to surplus inventories in the international market. To resolve the issue and to give breathing space to the sugar industries the Government, therefore, allowed freight subsidy @ Rs 1.75kg.
PSMA is of the view that despite grave situation, if the subsidy is withdrawn, then the sugar mill owners fear that the sugar industry may not be able to export the allocated quantity of 1.2 million tons which will delay growers payments and adversely effect the growers purchasing power to feed the next sugarcane crop with seed and timely fertilisers. PSMA has requested for the continuation of ECC decision that was taken in the national interest to ensure timely payments to the farmers and generate more than $600 million of foreign exchange needed to pay foreign debts.