Pakistan Sugar Mills Association (PSMA) has reportedly sought a 50 percent increase - from Rs 10 to Rs 15 per kg - in rebate on export of sugar at the beginning of the crushing season of 2015-16, well informed sources in told Business Recorder. With approval of proposal by the Economic Co-ordination Committee (ECC) of the Cabinet the government will pay millions of rupees rebate to sugar mill owners on export of 0.5 million tons of sugar.
Last year, the government had granted permission to sugar mills to export 650,000 tons of sugar with a rebate of Rs 10 per kg but the mills did not twice achieve the target citing lower international price. However, the government granted another extension as the mill owners influenced the Finance Minister through powerful channels. According to sources, mill owners argue that the export rebate of Rs 10 per kg was not sufficient in view of the international market. Sugar price had been calculated at Rs 62 per kg in Punjab and KPK on the base of sugarcane price of Rs 180 per maund (40 kg).
The sources further stated that the Association has forecast a surplus of over one million tons of sugar during the forthcoming crushing season as well as urged the federal government to allow export of at least 0.5 million tons of sugar from the very beginning of the crushing season 2015-16 and further quantity for export can be determined by March 30, 2016 after a review of production statistics.
"We request the government to increase the amount of rebate from Rs 10 per kg to Rs 15 per kg to compete in the international market where prices are subdued due to production glut," the sources quoted the powerful Association as saying. Under the Sugarcane Act, mills are obliged to crush the entire sugarcane crop and the resultant surplus is not by choice.
According to official documents, Federal Committee on Agriculture (FCA) has fixed sugarcane production target at 65.472 million tons for 2014-15. As per final estimates of the provincial agriculture departments sugarcane production is reported at 62.826 million tons (4 per cent less than the target) due to below achievement of 1.7 per cent and 2.3 per cent in area and yield.
Sugarcane production in Punjab will be less by 4.5 per cent, Sindh 5.1 per cent and Balochistan 7.1 percent. However, sugarcane production in KPK has increased by 3.4 per cent. Climate conditions in Pakistan generally provide a growing season of 8 to 10 months for sugarcane in a year. Punjab, Sindh and KPK share 64.9, 25.2 and 9.8 percent, respectively, in areas under sugar cultivation and 65.8, 26.3 and 7.9 percent, respectively, in production. Over time, the share of Punjab has gone down by 4.9 per cent in area and 3.0 per cent in production. In case of Sindh area share is gone up by 19.5 per cent and that of production has also gone up by 16.2 per cent. In KPK area share is down by 7.5 per cent and 17.1 per cent in production share.
During the decade ending 2014-15, area under sugarcane at country-level ranged between 907.5 and 124.3 thousand hectares (2242.4 to 3067.4 thousand acres) production from 44.666 to 67.460 million tons and yield oscillated between 48.62 and 57.54 tons per hectare. During this period, sugarcane production increased @ 3.2 per cent per annum mainly due to improvement in yield @ 1.5 per cent and 1.6 per cent per annum expansion in area.
According to the estimates of provincial agriculture departments sugarcane production at country level for 2014-15 crop is reported at 62.826 million tons, reflecting a decrease of 6.9 per cent over last year''s production of 67.460 million tons. The decrease in production is mainly due to 2.7 and 4.3 per cent contraction in area and yield. The following were the reasons for changes in area, yield and production: (i) less economic return received from last year produce as compared to other competitive crops (rice and cotton); (ii) disposal problems of cane and payment difficulties also restricted the acreage of sugarcane; (iii) late start of crushing by sugar mills and dispute over the price of sugarcane; (iv) crop cutting operations delayed, harvested crop also caused weight loss due to indent problem; and (v) insufficient rainfall in Sindh resulted in weight loss of cane.
PSMA''s annual general meeting is scheduled for Wednesday (today) in Islamabad. Federal Committee for Agriculture (FCA) is also holding biannual meeting today under the chairmanship of Federal Minister for National Food Security and Research, Sikandar Hayat Bosan, to review the crop positions.
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