No decision taken on sugar import?

Commerce Ministry's carelessness has reportedly compelled the federal government to consider sugar import option meant to bring down prices which are hovering around Rs 90 per kg in the retail market, well-informed sources told Business Recorder.

On December 28, 2016, the then Finance Minister had constituted an inter-ministerial committee headed by the Minister for Commerce, comprising Secretary Commerce, Secretary Industries and Production, Secretary Ministry of National Food Security and Research to hold monthly meetings to monitor domestic prices of sugar in case of any unjustified/unreasonable increase in its price; and tasked the committee to immediately recommend stopping sugar exports to the ECC. This mechanism was implemented till the end of last government.

However, since PTI came to power, the inter-ministerial committee never held its meeting to review the sugar prices in the domestic market. Prime Minister Imran Khan is the Minister in-Charge of Commerce and Industries.

Minister for Railways, Sheikh Rasheed Ahmad, in one of his recent interviews with a private channel described technocrats sitting in the Cabinet and ECC as the agents of Mafias.

Insiders claim that since the sugar prices are sky-rocketing, after wheat crisis, two meetings of Sugar Advisory Board (SAB) have been held to discuss the reasons behind an increase in sugar prices and stocks. The first meeting of SAB was presided over by Adviser to Prime Minister on Commerce, Production and Investment Abdul Razak Dawood whereas the second meeting was chaired by Secretary Industries and Production, Afzal Latif.

In the first meeting, both the Ministry and Pakistan Sugar Mills Association (PSMA) reached an informal agreement to fix ex-mill price of sugar at Rs 80 per kg. However, Ministry denied it saying that it was the idea of sugar millers not the government's.

According to the Punjab Government, sugar stock situation in the province is satisfactory till the end of crushing season.

In the second meeting, all the stakeholders agreed to stop remaining export quota of 0.350 million tons out of 1.1 million tons allocated by the Economic Coordination Committee (ECC) of the Cabinet on October 2, 2018 and December 4, 2018. Joint Secretary (PSD) Ministry of Industries and Production, Sara Imdad Ali, in a letter to Secretary Commerce has requested the Ministry to approach ECC regarding discontinuation of sugar export.

Ministry of Industries and Production has written another letter to the Ministry of Commerce suggesting that a summary should be submitted to the ECC for import of 0.3 million tons of sugar.

The MoI&P in its second letter (OM) of January 31, 2020 has cited the meeting of Sugar Advisory Board of January 28, 2020 wherein sugar stocks and prices were discussed in detail. During the SAB meeting, representatives of Punjab and KP governments informed that due to an overall decline in sugarcane production this year, production of sugar is expected to decline in the current crushing season 2019-20. The Ministry confirms that national average retail prices are continuously showing an upward trend in the market in spite of crushing season is in process.

Price Control and Prevention of Profiteering and Hoarding Act 1977 have been delegated to Provincial Governments in 2006. The administration of this Act has also been transferred to the Interior Division to the extent of Islamabad Capital Territory (ICT).

During the SAB meeting, held on October 29, 2019, Secretary Industries and Production also discussed upward trend in sugar prices and afterwards wrote a letter to Provincial Chief Secretaries for controlling hoarding and profiteering in their respective provinces. Accordingly, Government of Punjab fixed the retail price of sugar at Rs 70/kg utilizing powers under the Price Control and Prevention of Profiteering and Hoarding Act, 1977 in all its districts. Similarly, the KP government took a serious action against profiteering and hoarding.

During current spree of price hike, Ministry of Industries and Production again wrote a letter to the Provincial Chief Secretaries with the request to control recent price hike in the country.

According to the MoI&P's letter, as per Pakistan Bureau of Statistics (PBS), weekly national average retail price of sugar as on January 30, 2020 is Rs 79.06/kg. However, according to International Sugar Organisation, international white sugar price on January 30, 2020 was Rs 62.60/kg.

However, independent analysts say that imported sugar would cost Rs 77/ kg even after removal of 40 per cent Regulatory Duty (RD) as the price of sugar in the international market is over $ 400/ ton and $ 35 / ton premium. This is in addition to incidental charges and transport charges.

Pakistan Sugar Mills Association (PSMA) has also asked the government to allow duty free import of raw sugar to process and export.

The MoI&P argues that at the federal level, Trading Corporation of Pakistan (TCP)/Commerce Division can import sugar for domestic consumption sans duties and taxes that would make imported sugar cheaper than domestically produced sugar and ease the situation.

The MoI&P has requested that TCP should import 0.3 million tons of sugar in order to maintain strategic reserves.

When contacted, one of the participants of SAB meeting told this newspaper that no decision has been taken to import sugar in the meeting, adding that only stocks position came under discussion.

The sugar industry maintains that it is paying Rs 200/40kg to the farmers in areas due to shortage of sugarcane, adding that the industry has to recover the cost from consumers. According to media reports, the federal cabinet, in its previous meeting had decided to import sugar to arrest its price.